Broadly defined shadow banking assets declined by nearly 1.7 trillion yuan ($240 billion) in H1 to 59.6 trillion yuan, the lowest level since the end of 2016, according to a report by credit rating agency Moody's.

The contraction in shadow banking sector was primarily led by continued decline in asset management business originated by banks and non-bank financial institutions, the report said.

Authorities have been stepping up efforts to rein in risky shadow banking activities in recent years amid a broader crackdown on financial irregularities.

The pace of overall credit expansion has slowed, moderating the increase in economy-wide leverage, Moody's said.

Although growth of total bank lending to the corporate sector moderated in the second quarter of 2019, loans extended to the broader category of small and micro enterprises edged up to 10.1 percent from a year ago, compared with 9.6 percent in the previous quarter, the report noted.

"This reflects the authorities' efforts to encourage bank lending to small private businesses," it said.

The main beneficiaries of banks' increased lending to small and private companies remained those with credit lines of 10 million yuan or below, the report said.