China's 2nd-quarter economic growth spiraled down a bit from the heated 11.9 percent first-quarter expansion, but Beijing is not expected to re-pump a flood of credit to kick off another round of cut-throat growth.
Most economists predict that the world's 2nd largest economy probably grew 10.7 percent in the April-June quarter, as the government began to thwart a frenzy housing sector with stricter macro control policies. In June, Beijing decided to scrap tax rebates on exports of a variety of goods and materials, another measure to cool down export and growth.
To augment market sentiment, China's central bank, the People's Bank of China, said Saturday that it will continue to implement a set of relatively loose monetary policy in the second half year – a signal that it will not raise the interest rates and take more tightening measures to sooth market concerns that China's economy is headed for a steep fall or hard landing.
Meanwhile, the central bank reported Sunday that in June, China's banks issued 603.4 billion yuan ($89 billion) of new loans, which is less than the 639.4 billion yuan loans for May, and 1.53 trillion yuan less than last June, when Beijing's stimulus plan was at its crest.
The unwinding of the stimulus plan was clear during the first six months this year, as the country's banking system issued 4.63 trillion yuan of new loans, a huge 2.74 trillion yuan less than the same period last year.
The economic policy-makers were seriously worried about the rising debt of local governments as China's provinces borrowed feverishly last year to erect local projects and investments, regardless of their capability to return the loans timely to banks. Starting this year, the central bank has ordered state-owned lenders to be choosy in granting loans.
Ma Guangyuan, a known Chinese economist, has cautioned the government not to lift the restrictions on housing loans. In a signed article on Monday, Ma warned that it would be perilous to the economy, if the central bank loosens its control on loans to buy a second or more homes. Prices will run out of the roof, Ma said, if Beijing moves its foot off the pedal.
Potential property investors as well as speculators, both at home and from abroad, are on the watch-out for any hint that Beijing is to change its housing policy. Home sales have tumbled by as much as 60 percent in big cities like Beijing and Shanghai, since Beijing tightened its loan policy in mid April.
Most economists do not believe Beijing will revise the policy, just three months after its implementation, because the huge political pressure from vast number of home aspirants who condemn the sky-high prices. Also, the government itself is also worried about an exuberant property market will eventually lead to an outbreak of America-style home debacle and financial crisis.
Lu Zhengwei, an economist with China's Industrial Bank, said that the central bank should allow for more loans to infrastructure projects and the private sectors in the third quarter to buffer the economy from slipping fast.
The majority of economists have estimated China's economic growth to reach 10.5 percent in 2010, still the world's fastest expansion.