Elite Chinese Politics and Political Economy

My friend who works at a major bank discovered that PBOC sterilization of foreign exchange inflows has slowed down substantially in the past two months. It is no longer issuing new PBOC bonds to soak up the money released by the maturation of the old PBOC bonds (except for the 12-month PBOC bond). He suggests that this slow down in sterilization is a pre-emptive move by the PBOC against deflationary pressure caused by a combination of seasonality, slow-down in lending by banks, and political pressure to increase liquidity. I agree with all of these reasons and just add one more:

I don't have enough information to comment on the deflation issue, but expectation of further interest rate hikes in the US and the resulting slow-down in capital flow to China alone should compel them to shift gear. I am also interested in the lending slow-down. Perhaps CCB and BOC are in defensive mode in terms of preserving capital adequacy ratio before listings. If that's the case, NDRC is speaking on behalf of cash-starved industries. I wonder whether the joint-stock banks are also slowing down lending.