Local governments in China are complaining that monetary tightening by the central bank is behind their problems with economic growth, revenue and debt, but if they are hoping that the top leadership in Beijing will alter monetary policy, they are going to have to wait.

A series of tax breaks for small companies and reductions in government fees show that the central government is making efforts to curtail a borrowing binge like the one that prompted Prime Minister Wen Jiabao to declare the need for economic fine-tuning after a visit last month to Wenzhou, the epicenter of a credit bust.

Many investors took Mr. Wen's words to signal an imminent shift in interest rate policy, which is still ultimately determined by the top leadership, not the central bank.

But as China's leaders get set to chart the course for 2012 at the Central Economic Work Conference, expected in early December, the likelihood is that the emphasis will be put on being fiscally proactive and monetarily prudent.

"Macroeconomic policies will be kept stable," said Guo Tianyong, an economist at Central University of Finance and Economics in Beijing. "We cannot easily reverse the policy stance, as inflation remains relatively high. Fiscal policy can play a bigger role in adjusting economic structures and resolving the rich-poor income gap."

David Fuller's view China's monetary policy appears to be on hold as it waits to see if inflationary pressures continue to ease. They probably will as this weekly chart of the US$-denominated Continuous Commodity Index shows that commodity prices are still retreating from their March-April highs.