Lend, lend, lend! It is not only US and European governments that want banks to extend more credit. China does too. Its weekend move to abandon curbs on bank lending rings two alarm bells. First, it shows that, after three interest rate cuts and a reduction in bank reserve requirements, the economic slowdown is more serious than Beijing initially thought. Second, banks will have to carry some of the cost for cranking up the engine. In effect, they are under orders to lend to the credit-starved - in other words, riskier borrowers less likely to repay their loans.

Evidence of a sharp slowdown is increasing, especially in the export-dependent southern coastal provinces. Manufacturing last month contracted by the most since the CLSA PMI survey began in April 2004, marking the third consecutive month of deterioration and bringing the series to a fresh low. As economic growth drops towards 8 per cent - below which employment falls off, potentially creating social instability - Beijing is opening up the spigots.