Roach confirms China's "suspension" of lending....Uh oh Asia
"There has been an important evolution in the means by which China is now attempting to bring its overheated economy under control. The early actions involved adjustments in bank reserve requirements, one of the classic instruments of monetary policy. But given the still relatively undeveloped and fragmented state of the Chinese financial system, an instrument-based approach to monetary tightening hasn’t achieved much traction. As a result, Chinese authorities have shifted their tactics from constraining the price of credit to controlling its quantity. In recent days, a series of administrative actions have been implemented that leave little doubt as to Beijing’s intent — a mandated reduction in the debt content of certain infrastructure and materials capacity projects and an outright, temporary suspension of commercial bank lending in the final week of April that will undoubtedly effect new credit extensions through the weeklong national holiday celebration in early May. One word says it all —determination. China’s leaders will not allow this overheated economy to hit a wall.
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