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China eyes 'fine-tuning' monetary policy

China's central bank said it will maintain a monetary policy aimed at bolstering the economy, but will also start applying "fine-tuning", in what analysts see as a sign of emerging caution.

"The People's Bank of China The People's Bank of China (PBC or PBOC) (Simplified Chinese: 中国人民银行; Traditional Chinese:  will... resolutely res·o·lute  
Firm or determined; unwavering.

[Middle English, dissolved, dissolute, from Latin resol
 continue to carry out its moderately loose monetary policy," it said in its second quarter policy implementation report posted on its website late Wednesday.

The bank has on several occasions in recent weeks stressed its monetary policy would continue, in an apparent attempt to address investor fears that credit will be tightened.

The report caused the stock market to drop 2.44 percent by noon.

Chinese banks extended a record 7.4 trillion yuan Yuan (yüän), river, 540 mi (869 km) long, rising in S Guizhou prov. and flowing generally NE to Donting lake, Hunan prov., SE China. Navigation above Changde is limited by rapids to small craft.  (1.1 trillion dollars) in new loans in the first half of the year as they heeded government calls to support growth amid the global downturn.

However, the central bank did suggest it may adjust the flood of loans, amid concerns they have been funnelled into the asset markets for quick profit, rather than being put to use to bolster This article is about the pillow called a bolster. For other meanings of the word "bolster", see bolster (disambiguation).

A bolster (etymology: Middle English, derived from Old English, and before that the Germanic word bulgstraz
 the economy.

"We will impose some market-based fine-tuning measures according to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 domestic and foreign economic trends and price changes," the central bank said.

"We should appropriately handle the relationship between supporting economic growth and preventing and resolving financial risks," it added.

Andy Xie, an independent economist based in Shanghai, said this indicated that the central bank has turned more cautious and the huge new loan growth was unlikely to continue in the second half.

"Economic and asset bubbles... are quite evident now. This definitely has caused some divergence divergence

In mathematics, a differential operator applied to a three-dimensional vector-valued function. The result is a function that describes a rate of change. The divergence of a vector v is given by
 in top policy makers' opinions ... due to concern over the consequences when the bubbles burst," he told AFP (1) (AppleTalk Filing Protocol) The file sharing protocol used in an AppleTalk network. In order for non-Apple networks to access data in an AppleShare server, their protocols must translate into the AFP language. See file sharing protocol. .

"Public expectation about inflation is strong and self-fulfilling, and this will drive the bubbles even bigger."

The central bank has stepped up efforts to rein in to check the speed of, or cause to stop, by drawing the reins.
to cause (a person) to slow down or cease some activity; - to rein in is used commonly of superiors in a chain of command, ordering a subordinate to moderate or cease some activity deemed excessive.

See also: Rein Rein
 liquidity in the banking system by issuing more central bank bills, a short-term bond to buy back excess funds at commercial banks, he said.

The bank's data showed only 480 billion yuan in central bank bills were issued in the first three months of this year, but the figure jumped to 930 billion yuan in the second quarter.

The Chinese economy grew 7.9 percent in the second quarter after 6.1 percent in the first, which economists said was largely underpinned by unprecedented lending.
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Publication:AFP Asian Edition
Date:Aug 6, 2009
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