When it comes to the economy, China's policy makers have often been criticized for a heavy-handed approach, stepping in at the first signs of trouble. That makes the reluctance by the central bank to pump in cash and alleviate a credit squeeze for local lenders highly significant, analysts say.
"There is a sea change taking place in China," said David Mann, the head of regional research for Asia at Standard Chartered Bank in Singapore. "The reluctance to intervene in the money markets, the tolerance of a lower rate of growth, it's all part of the same story of China trying to secure a better long-term outlook for the economy."
A credit squeeze among China's lenders took a turn for the worse on Thursday after overnight lending rates surged. The seven-day repo rate, which is seen as gauge of confidence to lend in the interbank market, rose to a record high above 10 percent, before easing back to around 8 percent on Friday.
The prospect of a liquidity drying up in world's second largest economy rattled markets inside and outside China, unnerving investors at a time when the U.S. Federal Reserve looks set to start unwinding some of monetary stimulus it has pumped into the economy in recent years.