Can China Slow Its Bank Lending?

Leland Miller submits:

For the past three decades, the Chinese economy has essentially been propped up by a steady stream of state subsidies disguised as commercial bank lending. In 2011, however, two things are becoming clear. First, the amount of lending has risen to levels far beyond what economists previously believed, to a point where the stability of the system may soon be threatened. Second, that even as Beijing begins to recognize the perils of such lending, it may no longer have the power to close the floodgatesnor even have a consensus on how to try.

In mid-February, Chinas central bank announced that yuan-denominated lending in China had dropped over 15% to 1.2 trillion yuan

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