China's banks have dialed back lending to the lowest level in 14 years as economic woes pile up

• In July, the volume of loans doled out from Chinese banks hit their lowest amount since 2009.
• The People's Bank of China said new loans reached 345.9 billion yuan in July, less than half the amount expected by Bloomberg economists.

China's economy continues to amass a range of bleak data from property and trade to manufacturing and demographics, and on Friday the People's Bank of China reported that new lending in July fell to the lowest level since 2009.

Chinese banks doled out 345.9 billion yuan in new loans last month, well below the 780 billion yuan economists had expected, according to a Bloomberg report and survey.

The smaller volume signals that demand for loans is deteriorating, a point further supported by July's sharp drop-off in aggregate financing, a measure of credit.

The data release also showed mid- and long-term loans to households, a gauge for mortgages, shrank by 67.2 billion yuan, and that loans to companies also dropped month over month in July to 271.2 billion yuan.

Additionally, the People's Bank of China said year-on-year growth of broad M2 money supply slowed to 10.7%.

The big miss on bank lending, too, suggests that policymakers' still have their work cut out for them as far as monetary policy. On Tuesday, the People's Bank of China cut several interest rates in a bid to boost the economy, following a similar move in June.

Weak credit growth adds to the red flags on China's economy that are piling up.

Housing market data out Wednesday showed prices for new homes declined for the second consecutive month, with 49 of the measured 70 cities reporting month-over-month dips.

Industrial output rose 3.7% in July from a year ago, slowing from June's 4.4% pace. Retail sales growth cooled to 2.5% from 3.1%.

And consumer prices dropped annually in July for the first time in two years, joining producer prices in deflation territory.

"Deflation means the real value of debt goes up," David Dollar, a senior fellow at the Brookings Institute's China center, told Insider in a recent interview. "High inflation we know is bad, but it does help manage debt burdens over time. Deflation does the opposite."