Chinese banks kept up a strong pace of lending at the start of the year, even with signs of tightening by the central bank, highlighting the challenge Beijing faces as it tries to deflate asset bubbles without risking a blow to economic activity.

January’s new yuan loans were the second highest on record as banks stepped up lending, indicating policymakers’ efforts to rein in risks have not reduced bank credit being extended to China’s highly-indebted corporate sector.

A spike in off-balance sheet lending also showed demand for credit remained strong, while inflation picked up to multi-year highs, though analysts expect any tightening to be gradual as China’s economic recovery is fragile.

“This is not across the board or broad tightening that we normally see…we think the recovery momentum is driven by the recovery in prices, especially payment protection insurance (PPI), rather than any real return of real demand,” said Betty Wang, senior China economist at ANZ in Hong Kong.

“We do not think the economy is solid enough to counter broad-based or aggressive tightening.”

Much of the increase in consumer prices in January was due to a seasonal rise in food and travel costs ahead of the Lunar New Year holiday, while producer price gains slowed by half on-month.

Analysts say the People’s Bank of China (PBoC) is raising rates on some primary money rates to signal to markets that it is keeping an eye on financial risks, but will keep liquidity ample, which includes continued expansion of credit.

Chinese banks added a net 2.03 trillion yuan ($295.74 billion) in new loans in January, while credit growth including non-bank lending rose 3.74 trillion yuan.

The expansion in broad M2 money supply was stable while growth in outstanding credit was also on trend at 12.8 percent, supporting views the central bank will keep monetary conditions basically stable, with some marginal tightening targeting specific sectors such as property.

Indeed, to help cool the heated housing market, banks in some big Chinese cities have already started to lower discounts on lending rates for first-time home buyers, the China Securities Journal reported earlier this month.

Chinese banks usually “front load” loans early in the year after the government renews their credit quotas, so data over the next few months will provide a better picture for credit growth trends this year.