It is reported that China vowed to exercise stricter control over bank lending next year, guiding credit to new energy projects and consumers, while choking off financing to polluters and sectors riddled by overcapacity.
The central bank also reaffirmed its long standing commitment to maintain an appropriately loose monetary policy though added that it would adopt a more flexible posture.
This language, directly echoing a key policy statement by the country''s top leaders earlier this month, has been interpreted by investors as meaning that China will gradually rein in its ultra loose pro growth policies over the course of 2010 but steer clear of overly harsh tightening.
The People''s Bank of China in a statement said that "We will control the speed of monetary and credit growth, guiding financial institutions to issue loans in a stable manner and to avoid excessive volatility.”
Chinese banks are on track to make a record CNY 9.5 trillion (USD 1.4 trillion) in new loans this year, nearly double last year''s total after they answered the government''s call to open the floodgates and power the economy''s recovery from the global financial crisis.
But the surge in lending appeared to go beyond even what the government expected, fuelling concerns that it was leading to property and stock market speculation and going to industries that were not in need of financing.
The government is expected to trim new lending to CNY 7 trillion to CNY 8 trillion next year and it showed that it will devote considerable energy to making sure that the money goes where it wants it to go.
The central bank said that "We will strictly control lending to highly polluting, energy intensive industries, to sectors with overcapacity and to new projects.”