China's Loose Policy Ending, Newspaper Says

China's recent loose monetary policy is coming to an end, said an editorial in the China Securities News published Tuesday.

Liquidity conditions have been looser than expected since Chinese New Year, the paper said.

But the People's Bank of China isn't likely to adjust interest rates or reserve requirements in the short term, the paper said. Instead, the main mechanism for transmitting policy is likely to be bond purchases and sales by the central bank, known as open market operations.

The paper didn't claim insider knowledge on the outlook for monetary policy, but its commentaries on policy are generally highly regarded in the market, having correctly predicted policy moves in the past.

The PBOC hasn't made any changes to interest rates since they were cut in July 2012, relying on open market operations to control the amount of liquidity in the financial system.

The PBOC will be reluctant to tighten conditions too drastically because of the huge levels of financing required for the country's urbanization drive, the China Securities News said. China's incoming leadership is expected make urbanization a centerpiece of its policy agenda.

It is important to build up multiple financing channels in addition to bank loans, the paper said, such as allowing local governments to issue municipal bonds.