Timeline: China pulls on reins as economy booms

(Reuters) - China has started slowly pulling in the reins on loans and liquidity to stave off inflationary pressures and prevent the world's third-largest economy from overheating.

The central bank said on Friday it was raising banks' reserve requirements for the second time this year.

Global markets are rattled that tighter monetary conditions will dampen demand from an economy that has led the global recovery from the financial crisis.

The following shows key developments this year:

Feb 12 - People's Bank of China surprises markets by raising banks' reserve requirements by 50 basis points, effective Feb 25, its second increase this year. Few traders had expected a move so soon after a surprisingly low inflation reading for January.

Feb 11 - PBOC says it will guide monetary measures away from anti-crisis footing but maintain appropriately loose policy with domestic demand still not on solid ground; vows to ensure stable growth while controlling inflation expectations.

Feb 11 - Chinese banks extend 1.39 trillion yuan in new local-currency loans in January, up from 379.8 billion yuan in December and more than expected, data shows.

Feb 3 - A major Chinese bank, Bank of China, raises mortgage rates in one of the first signs of how government credit clampdown could tame turbo-charged growth.

Feb 2 - Reserve Bank of Australia surprises markets by skipping a rate rise, noting tighter policy in China among other factors in its statement. Before the meeting, a rate rise had been almost fully priced into markets.

Feb 1 - China orders banks to ensure excessive credit has not illegally entered the stock or property markets in latest bid to bring pace of lending under control.

Feb 1 - Shanghai stock market closes at lowest in more than three years on fears of more tightening measures.

JANUARY

Jan 30 - PBOC Deputy Governor Zhu Min tells Reuters the central bank is ready to take further steps to ensure rapid loan growth does not destabilize the economy.

Jan 29 - PBOC says it will ensure money and credit growth remain ample in 2010 even though inflation is likely to rise.

Jan 27 - China's biggest bank ICBC says it has stopped rolling over some loans to slow credit growth as Chairman of China Banking Regulatory Commission instructs banks to ensure even pace of lending over the course of 2010.

Jan 26 - IMF sees no serious risk of a market bubble in China, a senior official tells a news conference.

Jan 21 - China reports that GDP in Q4 2009 rose 10.7 percent over the same year-earlier quarter.

Jan 21- China's central bank guides up its bill yields for the second time this year, highlighting its determination to fight inflationary pressures after strong Q4 GDP. [ID:nTOE60K011]

Jan 20 - Chinese banking authorities order some major banks to curb lending for the rest of January, intensifying efforts to prevent loan growth from overheating the economy.

Jan 20 - China tells Bank of China, Industrial & Commercial Bank of China, CITIC Bank and China Everbright Bank to increase reserve requirements by 0.5 percentage point.

Jan 19 - China will maintain "reasonable growth" in credit and money supply and stick with proactive policies to boost demand but will also curb speculative property investment and take steps to deal with inflationary expectations, Premier Wen Jiabao says.

Jan 18 - PBOC allows one-year bill yields to rise more than expected, signaling it aims to shift fund drains to longer-term tenors to rein in lending and fight inflation.

Jan 17 - China's banking regulator urges banks to be cautious on lending this year, ensuring credit is used in the real economy and not for speculation. It also calls on banks to monitor the property sector and make "greater efforts" to control loan risks.

Jan 13 - China renews vow to curb runaway property price rises by increasing the supply of affordable housing and cracking down on speculation.

Jan 12 - China announces a 50-basis-point increase in banks' required reserves, its strongest step yet toward tightening monetary policy that rocks global financial market because it came earlier than expected.

Jan 12 - PBOC raises yield on 20 billion yuan ($2.9 billion) of 1-year bills, having held it steady for previous 20 auctions; also drains record 200 billion yuan from the financial system via 28-day bond repurchase agreements.

Jan 7 - Central bank surprises by raising auction yield of its three-month bills for the first time since mid-August.

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(Compiled by Asia Treasury Desk; +65 6870 3840]