China’s central bank, in a surprise move on Wednesday, shifted its economic focus from fighting inflation to stimulating growth by freeing the nation’s commercial banks to lend more money, the International Herald Tribune reported. The bank’s move was separate from the subsequent announcement by central bankers in the United States, Europe and Japan that they would pump more dollars into the European banking system. And Western officials said Beijing’s move was not done in coordination with theirs.

China is more interested in investing directly in Europe than buying European Union debt with its colossal foreign currency reserves, a senior civil servant said Tuesday, The Wall Street Journal Real Time Brussels blog reported. Wang Yiming, a vice director at the National Development and Reform Commission’s macroeconomic research institute, said at the EU-China forum in Brussels that internal discussions about how to invest the country’s $3.2 trillion of reserves are leaning in this direction.

China's government said yesterday that it has increased scrutiny of trading houses, and that exchanges set up without Beijing's approval will be banned from trading derivatives and other financial products, the Wall Street Journal reported today. In the January-October period, 58 trading houses were established, the state-run China Daily newspaper said Thursday. "Currently, some trading houses are conducting stock futures trading without regulatory approval.

China and Hong Kong said yesterday that they have doubled the value of a bilateral currency swap to 400 billion yuan ($62.92 billion) as Beijing seeks to expand the pool of yuan set aside to ease any strain on foreign banks that may be under pressure to access the Chinese currency, the Wall Street Journal reported today. The expanded swap agreement allows the Hong Kong Monetary Authority, the territory's de facto central bank, to tap a yuan pool from the People's Bank of China.

Local governments in China are complaining that monetary tightening by the central bank is behind their problems with economic growth, revenue and debt, but if they are hoping that the top leadership in Beijing will alter monetary policy, they are going to have to wait, according to a Reuters analysis yesterday.

There is now evidence that the euro zone debt crisis is not only spreading to banks by undermining their ability to fund themselves, but to the major trading partners with the region. In this case, that is China, the Wall Street Journal reported Friday. And what is bad for China is definitely bad for the global economy. In fact, news of a slowdown in China will probably eclipse any of the good news coming out of the U.S. Any negative impact on the U.S. economy from the euro zone crisis may be slower in showing through, even though U.S.

China’s banking regulator warned lenders that some projects backed by local governments may run out of funds, and loans to property developers are likely to sour as sales slow, a person with knowledge of the matter said, Bloomberg reported. The China Banking Regulatory Commission told lenders last week to step up asset sales and debt restructuring for unprofitable local government financing vehicles that are struggling to repay loans, the person said, declining to be identified as the instructions were private.

Diplomatic deadlock is curbing China's will to provide cash to help end the euro zone crisis after Europe spurned the simplest of Beijing's three key demands, two independent sources have told Reuters. China had offered help in return for European support to grant it either more influence at the International Monetary Fund, market economy status in the World Trade Organization, or the lifting of a European arms embargo, said the sources, both of whom have direct knowledge of the matter, including one who has ties to the leadership in Beijing.

While many businesses in the United States struggle to stay afloat and workers collect unemployment checks, China has the opposite problem: an economy, pumped up by expansive lending by state-controlled banks, which is growing too fast to keep inflation and speculation in check, the International Herald Tribune reported. Beijing’s solution: Create an artificial shortage of credit.

It’s “too soon” for China to discuss further bond purchases from Europe’s revamped rescue fund, Vice Finance Minister Zhu Guangyao told reporters in Cannes, France, on the eve of a summit of world leaders, Bloomberg reported. While there are proposals to bolster the European Financial Stability Facility, “there are no concrete plans yet so it’s too early to talk about further investments in these tools,” Zhu said today. Zhu said the rescue fund, already part of China’s portfolio, is an “important tool” to address the sovereign debt crisis.