China vows stricter lending control next year

24 Dec, 2009

China on Wednesday 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.
"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," the People's Bank of China said in a statement after its fourth-quarter monetary policy meeting.

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