China eases credit as property prices slide Yao Wei from Societe Generale said the downturn was likely to send "shockwaves" through the industry chain. Power generation, infrastructure investment, as well as property, all contracted more deeply than expected in January, even adjusted for the timing of China's Lunar Year. Imports contracted 22.5pc, and M2 money supply growth fell to 12.4pc. Zhiwei Zhang from Nomura described the fall as "alarming," reflecting a sharp slowdown in industry. Xi Jinpeng, the man likely to take over this year as China's new leader, said the carefully calibrated slowdown was on track. "There will be no so-called hard landing," he said on a trip to the US. The Chinese authorities face a delicate task as they try to deflate the property bubble gently, a challenge that has defeated governments across the globe over the years. The property sector accounts for 13pc of GDP, comparable to Spain at the peak of its bubble. Credit in China has increased by almost 100pc of GDP over the last five years, largely due to the lending blitz unleashed after the Lehman collapse. The credit boom ranks as the biggest of any major country since the Second World War, exceeding the pace of loan growth during the US sub-prime bubble. Communist officials now think the country over-reacted in 2008-2009, flooding the economy with indiscriminate credit. The policy led to surging inequality between rich and poor. They are wary of repeating the error despite signs that Europe's recession is squeezing Chinese exporters. The central bank's room for manoeuvre is limited since inflation jumped to 4.5pc in January. The economy has reached a point in the quadrant of the cycle where the trade-off between growth and rising prices has turned less friendly.