Reasons behind Chinese economic policy are entirely domestic and these are not illuminated in any way.

I think the Euro crisis has thwarted China's monetary strategy for this year. In my diary What China wants 4 months ago I surmised

China wants to stop accumulating reserves and possibly unwind the ones they already hold. They might do this by allowing the Yuan to appreciate against other currencies, notably the dollar, but they don't just want that - they want to import high-tech goods from the US which at the moment is restricted by US policy. So, my interpretation of these words is that China intends to use their dollar reserves to pressure the US government to allow what amounts to technology transfer from the US to China. In fact, the way the Washington Post headlines their coverage (China's leader blames U.S. for bilateral tensions, rejects call to adjust currency) indicates that China is not about to give in on US calls to revalue their currency without access to the imports of their choice. The situation right now goes in the opposite direction, with both countries erecting mutual trade barriers.

Unfortunately for China, the Euro has dropped more than anyone was expecting at the start of the year and so China may have decided to prop it up a little. But this is just speculation.

If China decides to start lending to Europe it might get us out of the recession but here they are pu[s]hing against the EU's policy stance of deficit and debt reduction. I guess instead of owing money to each other Europeans can owe it to China and still remain austere...

The problem with this is that Europe might get too comfortable and fall into the same trap the US fell into over the last couple of decade of unsustainable debt-fuelled economic activity...

I can only go on publicly available information via press reports, but I do try to look at what it means for "us" (Spain, the EU, the West™), and to voice an opinion on what my polity should be doing.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan