China's nascent rebound from the global crisis was fueled by a flood of lending by state-owned banks last year. Bankers cut lending under government orders toward the end of 2009 but regulators worry credit might rebound this year.
The move indicates Beijing is confident growth can be sustained and has shifted focus to preventing financial excesses and economic overheating. The government is forecasting growth of 8.3 percent for 2009, up from a low of 6.1 percent for the first quarter of the year.
The central bank raised the amount of reserves that banks must hold by 0.5 percent to 15 percent of their deposits. Also Tuesday, the bank raised interest rates paid on one-year bills for the first time since August to absorb money from the market and cool credit growth.
"This series of moves by the central bank provides a clear sign that policymakers are following through on their pledge to guide credit in order to pre-empt rising inflation and avoid asset price bubbles," said Jing Ulrich, chairwoman of China equities for J.P. Morgan, in a report.
Chinese stock and real estate prices soared last year, driven in part by stimulus money being diverted to speculation. The central bank governor and others have called for measures to prevent a dangerous boom and bust in asset prices, warning that could hurt the economy and banks that are left with unpaid loans.
Beijing also is trying to curb an inflow of foreign "hot money" that is coming into China to speculate in stocks and real estate.
Chinese banks lent 8.95 trillion yuan ($1.3 trillion) in January-October, up from a total of 4.2 trillion yuan for all of 2008. Much of that was in the first half of the year and lending fell sharply after July, when regulators tightened regulations on loans to buy second homes and ordered banks to scrutinize borrowers more closely.
The recent measures appear to be aimed at preventing a return to the torrid lending of early 2009. Despite the lending curbs, Chinese leaders have repeatedly assured the public that stimulus spending would continue in 2010. They say the government will pay special attention to entrepreneurs who missed out on aid in the first year of the stimulus.
The spending has sent housing prices soaring in Beijing and Shanghai since late 2008. Prices have roughly doubled over the past three years to more than 12,000 yuan ($1,700) per square meter, according to a December report by the U.S. bond manager Pimco.
Neighboring Russia is suffering from the opposite problem.
Lending there is weak because banks are afraid of incurring bad loans, the chairman of its central bank, Sergei Ignatyev, told parliament last month. He said corporate lending is flat, and retail lending is declining.
The politically sensitive prices of food and consumer goods also are edging up. After nine months of decline, consumer prices rose 0.6 percent in November from a year earlier.
The bank reserve rate now stands at 15 percent, its highest level since Dec. 5, according to the Chinese financial data Web site Hexun.com.
Rural credit cooperatives and were exempt from the increase to make sure they can lend enough for spring planting, the central bank said. Their reserve rate was left at 13.5 percent, according to Hexun.com.
The boost in the interest rate on the one-year bill was the first since August. The central bank had raised the rate for its three-month bills on Thursday.
The increase in the reserve rate was announced after Chinese stock markets closed.
The country's benchmark Shanghai Composite Index closed up 1.9 percent, or 61.22 points, at 3,273.97 on Tuesday. The index was one of the world's best performers in 2009, ending the year up 80 percent after heavy stimulus spending.
Investors are sensitive to changes in credit that they depend on to finance speculation and previous lending curbs have caused stock prices to fall.