Late last week China forced its banks to stop some lending. This caused some anxiety, with people fearing China is stepping up its campaign to engineer a slowing in its rapid economic growth. A much more likely explination is the authorities wanted to prevent a rush of loans before the week-long May Day holidays. Forbidding some lending would stop the figures for April lending looking extra high and putting even more pressure on themselves to "do something".

This is how China does things. Controlling the statistics is just as important as actually doing something about the problem. When you have a capitalist market economy mixed with command style state-owned companies (who have no profit motive) and regulators that have none of the normal economic tools to control things, forbidding some lending becomes a sledgehammer solution to a mighty big problem. Expect more of the same in the months to come, both to control growth and to control the statistics.