A deputy head of the China Banking Regulatory Commission said on Thursday that banks should reduce the amount of loans they issue.

Commission vice-chairman Jiang Dingzhi said during a meeting with financial institutions that the banking sector should pay close attention to macro-economic development.

Many economists warn that the economy is facing overheated investment and earlier central bank figures showed that domestic banks issued 1.78 trillion yuan in loans in the first five months, already consuming more than 70 percent of the annual target.

Banks should move to reduce non-performing lending, Jiang said.

He called on commercial banks to adjust the lending structure by actively increasing loans to small enterprises, saying big clients are often more risky because of their "complication and affiliation".