Starting Thursday, commercial banks are barred from lowering interest rates on consumer housing loans to below 0.9 percent of the PBOC's benchmark rate. That raises the upper limit of interest rates on loans longer than five years by 20 basis points to 5.51 percent, the bank said.

It is also allowing commercial banks to raise down payments from 20 percent to 30 percent in cities where the lenders believe property prices have been rising too fast.

"That means it has become the decision-makers' unuttered view that there has been property bubble in some cities," said Wang Songqi, deputy director of the Chinese Academy of Social Sciences' Finance Research Institute. "Although the measures are only a moderate tightening, they sent a signal to the market."

China's real estate prices have risen rapidly for more than a year. The trend has prompted worries among some analysts and government officials about a property bubble, although many hold that the growing trend of urbanization is delivering substantial support to the industry.

Real estate investment slowed last year, but the continued uptrend in prices "needs close attention," the central bank said in its 2004 fourth-quarter monetary policy report, released last month.

Nine cities reported property price increases heftier than 9 percent last year, including Shanghai Municipality and Nanjing, in east China's Jiangsu Province.

The PBOC also announced on Wednesday its decision to reduce the annual interest rate on excess bank reserves to 0.99 percent from 1.62 percent. Banks keep these reserves in addition to required reserves basically to meet payment needs.

The rate cut "will help commercial banks further improve their efficiency in fund use and liquidity management, and will promote the liberalization of the interest rate regime," the PBOC said in a statement.

Wang said the move is aimed more at pushing the banks to lend more to businesses, many of which -- particularly the smaller ones -- are feeling a liquidity crunch, partly as a result of the ongoing macro management.

China took a slew of measures as early as the second half of 2003 to curb the rapid growth in bank loans and fixed investment, which gave rise to worries about overheating.

"Liquidity is already on the tight side (among businesses)," Wang said.

The central bank has scaled down its money supply growth target for this year to 15 percent from last year's 17 percent.

The growth of broad money supply slid to 13.9 percent at the end of February from 14.1 percent one month earlier, which some economists worry is a bit too slow to support this year's 8 percent economic growth target.

(China Daily March 17, 2005)