In a statement, the People's Bank of China said it would require lenders to decrease the pool of money available for borrowing by introducing a new ceiling for the level of deposits they are obliged to keep with the central bank. From mid-August, the Reserve Ratio Requirement threshold will be raised from 11.5pc to 12pc, it said.
Such measures have had little effect to date, with China's economy expanding almost 12pc in the last quarter, its fastest rate for 12 years.
There are concerns real estate development and factory building could spark inflationary pressures and result in a growing crop of heavily indebted individuals and small business-owners.
"We do not expect the RRR hike alone to have much impact on the real economy or financial markets," said analysts at Goldman Sachs.
The move by the central bank failed to dampen sentiment among traders in Shanghai Stock Exchange-listed companies, with the bourse's benchmark index closing at a record high yesterday. The Shanghai Composite Index closed up 2.2pc at 4440, well beyond the previous high.
It encapsulated a good day for markets across Asia following last week's turbulence in equities across Europe and the US. Of the major exchanges in Asia, only Taiwan posted a decline from Friday's close.
The clampdown came as Hank Paulson, the US treasury secretary, continued his latest visit to China to resolve ongoing issues over the valuation of China's currency, the yuan, and product safety.
The desirability of a presence in China for foreign investors was highlighted by Royal & Sun Alliance, which announced mainland insurance regulators had granted it a licence to offer non-life insurance products there. R&SA has appointed Mike Jakeman, who worked for the company in Canada, chief executive of its business in China.