Lots of interlocking stories from Xinhua this morning. They all fundamentally deal with the problem of China's overheated economy and sky-high rate of investment.

First off, we have the head of the China Banking Regulatory Commission (CBRC), Liu Mingkang, warning that too much lending is still going on and that the industry needs to shape up:

Excessive liquidity and production overcapacity in some sectors still plagues the economy, banks must be cautious in making loans.

Old story, yes, but despite the progress that has been made in some parts of the sector, I would say notably the big State-owned banks that have reformed prior to public listings, others are still having process and quality problems. A scary proposition considering that the sector will open up more extensively to foreign competition in a matter of weeks. Here is my favorite quote from Liu, who was suggesting that the problem was bank business approaches: "The top priority of local banks is profit not market share." Nice.

Second, and perhaps to present some good news, this article reported on the Liu Mingkang speech with the addition of some positive statistics. So as not to bore anyone, I will omit the stats. The message was that commercial banks in China are getting better at dealing with assessing credit and risk and have developed more professional procedures for making lending decisions. Does this contradict the previous article? Not really, but it certainly has a different emphasis. To be fair, the second half of the article talks about all those things that Chinese banks still need to work on to respond to the expected competition from foreign banks.

Third, and most interesting, is a short piece on land use and development. Remember that the lending problem is focused on fixed asset investment (new factories, new real estate development, etc.), particularly in specific industries that do not need the additional capacity, such as steel. All of these projects need land, and the local government officials are the ones that are approving these deals, often taking land out of the public domain and turning it over to developers. In many cases, the compensation given to residents is so much lower than the expected profits of the developers that friction ensues (well, maybe "friction" is understating the problem here - nasty incidents have resulted).

This whole land issue is quite politically charged now, so the quoted statement from the Ministry of Land & Resources is understandably, and deliberately, strictly limited to economic subjects:

"The principle is to strengthen macro-economic control and use land resources economically," it said, adding that localities must make use of land "scientifically and rationally" to protect farm land and land for other agricultural purposes.

Some truth there, to be sure, particularly since this lack of control has led to more factories and shopping centers that we don't need. Just as important, however, is that land is not taken away improperly without adequate compensation, pissing off the natives in the process and leading to social unrest.

Talk about a complex set of issues . . .