China: No, Really, This Time We&#39;re Going To Tighten Lending

China is once again using winks and nods to signal to the market that it will ease back its ultra-stimulative economic policies.

Reuters: The headline theme of the Central Economic Work Conference, which concluded on Monday, was continuity: the government once again vowed to maintain the stimulus spending and accommodative monetary stance that it adopted last year to cushion the blow of the global financial crisis.

Beneath that headline, though, Beijing offered a smattering of signs that it will gently pull on the reins.

It said that new investment projects would be "strictly controlled," implying that capital spending, which has been the biggest contributor to overall growth this year, will ease as the government slows the pace of approvals.

The top leadership also insisted that it would enhance policy flexibility, opening the door to a more pronounced shift to tightening at a later date.

Yet this time more concrete measures are backing their words.

Sydney Morning Herald: China's banking regulator plans to slow new lending to between 7 trillion yuan ($1.1 trillion) and 8 trillion yuan next year, a person familiar with the matter said. The China Banking Regulatory Commission's recommended range compares with 8.9 trillion yuan of new local-currency loans in the first 10 months of this year. The person spoke on condition of anonymity because he isn't authorized to discuss the matter publicly.

Reuters: Increases in bank' reserve requirements could come as early as the start of the second quarter, while the central bank will probably raise interest rates by about 54 basis points during the second half of next year, he estimated.

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