Growth in Australian bank lending to China has eased from a period of rapid expansion, as foreign banks that had flocked to lend money to Asia's growth engine adopt a more cautious stance.

Australian bank exposure to China dipped by US$700 million to US$33.7 billion in the December quarter, and its annualised growth rate slowed markedly over the last year, Bank for International Settlements figures published last week show.

A slowing Chinese economy means more bad debt for banks and weaker trading flows for foreign lenders.

After Australian bank exposure to China swelled by 70 per cent over 2013, this annual growth rate fell to 10 per cent last year.

A similar global slowdown in foreign bank lending to China was highlighted by the BIS.