The Chinese central bank is concerned that the flood of currency reserves is pumping up asset prices and could lead to higher inflation. China is not tightening monetary policy too aggressively, as analysts rule out interest rate rises this year. The government and the central bank both agree on the dire need to secure a solid economic recovery of the world's third largest economy.

The People's Bank of China has indicated that the phase of monetary loosening is over and that it wanted to increase bank lending. The bank lending will be positive because it has helped fuel a rise in property and stock prices. So far China has had impressive results in reviving their economy as gross domestic product figures due on Thursday are likely to show a 7.5% growth in the second quarter.

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