BEIJING (Reuters) -New bank lending in China tumbled more than expected in February from a record high the previous month, even as policymakers seek to shield the economy from an escalating trade war with the United States by boosting consumption.

Chinese banks extended 1.01 trillion yuan ($139.62 billion)in new yuan loans in February - the lowest February reading since 2020, according to Reuters calculations based on data released by the People's Bank of China (PBOC) on Friday.

Analysts polled by Reuters had expected new yuan loans would fall to 1.275 trillion yuan from a record 5.13 trillion yuan in January.

A pull-back in February from January was widely expected, because Chinese banks tend to front-load loans at the beginning of the year to get high-quality customers and win market share.

But Washington and Beijing have exchanged tit-for-tat tariffs in recent weeks, heightening uncertainty, with markets bracing for even more U.S. measures.

"While bank loan growth continued to slow to record lows in February, that was more than offset by stronger growth in non-bank credit," Capital Economics said in a note.

"Strong government bond issuance should continue to provide a prop to non-bank credit growth over the coming months, but subdued private demand will keep bank lending weak."

Household loans, including mortgages, contracted 389.1 billion yuan, compared with a rise of 443.8 billion yuan in January, while corporate loans fell to 1.04 trillion yuan from 4.78 trillion yuan, according to Reuters calculations based on central bank data.

Combined January and February new loans totalled 6.14 trillion yuan, down from at 6.37 trillion yuan a year earlier.

Sluggish domestic demand, persistent deflationary pressures and a protracted property slump paint an uncertain economic outlook, while the heightening Sino-U.S. tariff battle is threatening to curb exports, one of the few bright spots for the Chinese economy last year.

At the annual parliament session last week, China's Premier Li Qiang unveiled fresh fiscal stimulus steps and pledged increased efforts to spur consumption, to help achieve an economic growth target of around 5% this year, which analysts have described as ambitious.

Central bank Governor Pan Gongsheng also reaffirmed a pledge to cut interest rates and inject liquidity into the financial system by cutting the amount of funds that banks are required to hold as reserves "at an appropriate time."

The measures will add to Beijing's efforts since September to steer the economy back on track, including interest rate cuts, a 10 trillion yuan debt relief package for local government, and tax incentives to spur demand in the crisis-hit property market.

China's financial regulator urged institutions on Friday to boost support for consumption, promising to relax consumer credit quotas and loan terms as it offers long-term backing.

U.S. President Donald Trump's additional 10% of tariffs on Chinese imports took effect on March 4, adding on to February 4 tariffs.

China retaliated promptly by hiking up import levies covering $21 billion worth of American agricultural and food products, as the world's top two economies drew closer towards an all-out trade war.

Outstanding yuan loans rose 7.3% in February from a year earlier, down from the 7.5% pace in January and hitting a record low. Analysts had expected 7.4% growth.

Broad M2 money supply grew 7.0% from a year earlier, the central bank data showed, matching analysts' 7.0% forecast in a Reuters poll and January's reading.

The narrower M1 money supply inched up 0.1% year-on-year, compared with 0.4% in January.

Annual growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, came in at 8.2%, versus 8.0% in January and December.

Acceleration in government bond issuance to boost the economy could help boost growth in TSF.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies, and bond sales.

($1 = 7.2340 Chinese yuan renminbi)