Chinese economists are speculating that the government will rein in some of its expansive monetary policies this year.

"Stimulus policies have done much in the crisis, but it is time to consider when and how to withdraw them," said Qin Xiao, chairman of China Merchants Bank Co., Ltd., the country's sixth largest commercial bank.

Overcapacity in the steel industry and redundant infrastructure construction caused by too much lending could lead to high inflation, he said.

Chinese banks lent an unprecedented 9.6 trillion yuan (1.4 trillion U.S. dollars) in 2009, almost double that of 2008, and almost half the 2009 gross domestic product, according to People's Bank of China, the central bank.

To cool bank lending, the government began tightening the credit market by raising the capital adequacy ratio, provision coverage ratio, deposit-loan ratio and reserve ratio in the second half of last year.

China Banking Regulatory Commission chairman Liu Mingkang said the government planned to restrict credit supply to 7.5 trillion yuan in 2010.

Controlling real estate bubbles also required adjustment in monetary policies, said Lu Feng, vice director of China Center for Economic Research, Peking University.

According to the National Bureau of Statisticis, average house prices in China's 70 largest cities in January rose 9.5 percent year on year, the highest in 13 months.

On Monday, banks in Beijing raised down-payments of house loans from 20 percent to 40 percent of the house price, aiming to slow mortgage lending.

Since late 2009, other methods such as penalizing holders of undeveloped land and building affordable homes were taken to curb soaring home prices.

Premier Wen Jiabao said in a recent interview with Xinhua that the government was confident of keeping home prices within a reasonable range.

However, the government was not bringing an abrupt change to the stimulus policies, said Ba Shusong, a researcher with the Development Research Center of the State Council.

For instance, when the central bank raised the reserve ratio in January, the ratio for small financial insititutions, such as rural credit cooperatives, remained unchanged, Ba said.

In addition, stimulus plans for new high-tech companies, such as subsidies and tax breaks, would continue, said Finance Minister Xie Xuren in the Central Economic Work Conference held last month.

"The economy will step into a new crisis if the government withdraws stimulus plans too soon." said Liu Yuhui, director of the China Economy Appraisal and Rating Center, Chinese Academy of Social Sciences.

"Whether China's economy can recover from the crisis depends on the government's ability to balance monetary policies between stimulus and steadiness," Liu said.