The Chinese government is continuing to tighten its monetary policy. This effort follows a continued expansion and loans to monetary supply. M2, the country´s largest measure of monetary supply, grew 17.8 percent in February 2007, which was the fastest pace of growth in six months. New loans in January through February totaled 981 billion yuan, which represented nearly a third of the total volume of loans in 2006, which reached 3.18 trillion yuan. To counterbalance this, the government has again increased the percentage of funds that banks must keep on deposit. The move last Thursday, april 5, was the sixth increase in the past year -- the required rate is now 10.5 percent.

So far, a few mills have complained of the tighter credit terms; but overall, the availability of credit to mills has had limited impact.

Source: globecotnews