The country's social financing dropped by 800.1 billion yuan ($127.06 billion) in January, to 955.9 billion yuan year-on-year, the People's Bank of China said on Friday.

New yuan loans extended stood at 738.1 billion yuan, down by 288.2 billion yuan from last year, according to official figures.

The Spring Festival holiday and the unfavorable financing environment contributed to the sharp decline, Luo Yuding, a deputy director of the School of Finance of Shanghai University of Finance and Economics, told the Global Times Friday.

"However, it is better to look at this data over a long period, such as over a quarter and not merely over a month," Luo said.

Nevertheless, Nicholas Zhu, head of macro-commodity research in Asia at Australia & New Zealand Bank, told the Global Times the sharp decline showed the economic downturn caused by the sliding real estate market.

Equity fundraising by non-financial companies decreased 65 billion yuan in January year-on-year, to 8.1 billion yuan.

"The bad performance of the stock market and strict regulations have made it difficult for companies to go public in China," Zhu noted.

Zhu said it was hard to forecast the financing scale in 2012 due to many unstable factors, such as the property market and government economic policies.

The scale of social financing serves as a measure of fundraising around the country, by which the central bank can judge how much liquidity is in the financial system.

It includes all funds raised by entities in China's real economy in a period of time, such as bank lending, entrusted loans, trust loans, corporate bond issuances, equity financing and other sources of financing.