Not for the first time, there is a gap between what China says and what China does. Premier Wen Jiabao warned this week that the “foundations of recovery are not stable . . . we cannot afford the slightest relaxation or wavering”. The subtext seemed obvious: that China's exceptionally loose monetary policy will continue for the foreseeable future.

But a subtle shift is already under way. Monetary policy in China is not qualitative but quantitative. The People's Bank has a target interest rate but its focus is on economic growth and the assumed quantity of money needed to fund it. By that token, China has been tightening by stealth for a while.

The banking regulator last month told lenders to raise reserves to 150 per cent of their non-performing loans by the end of this year, up from 134.8 per cent at the end of June. A communiqué last Friday canvassed views on deducting holdings of other lenders' subordinated or hybrid debt from supplementary (non-core) capital. Then there are softer measures, such as reminding banks to ensure that loans for investment in fixed assets actually end up there. The central bank also has raised money-market rates to drain liquidity. The effects of all this can be seen in the M2 measure of money supply, which was up 28 per cent at the end of July, year on year, but which fell 3 basis points from the end of June.