China central bank signals end to tightening

China said Wednesday it would "fine-tune" its monetary policy amid "global systemic risks", raising hopes of a relaxation of tight credit as growth in the world's second largest economy slows. The nation's central bank also warned the eurozone crisis could "lead to global systemic risks if it spreads more to core countries," just as the Asian powerhouse suffers from a fall in exports due to lower demand abroad. "The People's Bank of China will... at an appropriate time and in moderate degree pre-emptively adjust and fine-tune (the monetary policy)," it said in a statement, adding it would do so according to changes in the global economy. China's economic growth eased to 9.1 percent in the third quarter from 9.5 percent in the second quarter due to government measures to tame inflation and economic turbulence in Europe and the United States. The central bank statement comes after the International Monetary Fund on Tuesday warned that China's financial system is at risk from bad loans, booming private lending and sharp falls in property prices. The Washington-based lender blamed "heavy" government involvement in the country's banks and watchdogs for reducing market discipline and corporate governance. Beijing, anxious about surging inflation, has been pulling on a variety of levers to curb consumer and property prices in the past year, including restricting the amount of money banks can lend and hiking interest rates. The measures appear to be having an effect -- inflation slowed sharply in October from the previous month, and property sales have also declined in some cities. The downturn in China's property market, a mainstay of the economy, could have a knock-on effect on global trade in commodities, analysts warn. Last month, 177 property agencies shut down in Beijing alone after sales nose-dived, according to a report published recently by Home Link China -- one of the country's biggest estate agencies. There are now more than 120,000 unsold properties on the market in the capital, the highest number in 29 months, the state-run Beijing News daily said, citing official figures released last week. Analysts are also concerned about the nation's politically sensitive trade surplus -- a constant bugbear for major trade partners such as the United States and Europe -- which widened to $17 billion in October from $14.51 billion in September. Beijing has indicated it may tinker with policy as the deepening eurozone crisis and US economic woes squeeze demand for Chinese exports and small businesses struggle to get financing, putting at risk millions of jobs. In a list of 29 key recommendations on how Beijing can improve its financial system, the IMF urged policymakers to allow state-owned banks to make lending decisions based on commercial risk rather than government policy. It also called on Beijing to allow interest rates to be determined by "supply and demand", and to use this tool rather than administrative measures to control credit. The IMF also called on authorities to loosen currency controls and give autonomy to the central bank and other supervisory bodies to "help bring the system more in line with international practices". Premier Wen Jiabao repeated last month that controlling prices was still a key task, but also said the government could alter economic policy when the time was right, in comments similar to the bank's Wednesday announcement. Analysts have said policymakers are likely to reduce the reserve requirement ratio -- the portion of deposits banks must set aside -- in the coming months to spur lending, but they have ruled out a change in interest rates.