In short, the People's Bank of China seems to be tightening the reins on the money supply, which could lead to continued slowing in the Chinese economy.
Last Thursday, Bloomberg reported that the People's Bank of China sold $16 billion worth of short term debt to banks to select financial institutions as a way of draining excess liquidity. Central bank jargon calls these "repurchase agreements" but what it basically means is the PBOC is giving debt contracts to banks, and the banks give the PBOC money in return, which is then taken out of the circulating money supply. This shrinks the money supply overall.
Some Chinese analysts are insisting that this is not a change in overall policy, but rather the choice of local banks who don't want extra liquidity just sitting there due to low demand for loans, and would rather hold short term debt. But in the end, to execute these repurchases is ultimately the choice of the PBOC, so whatever policy it wants to project to the markets, China's central bank is making it clear that it is not averse to shrinking the money supply on request from its member banks to do so.
At the same time, the PBOC has cut its benchmark interest rate three times in six months to 5.1%, along with two cuts in reserve ratios. While these measures do loosen monetary policy, they do not increase money supply directly. They only enable Chinese member banks to increase money supply by increased lending. If lending does not increase, neither does the money supply, no matter how low benchmark interest rates or reserve ratios are.
But swinging back to tighter monetary policy measures, according to a Financial Times report published back in February citing this official PBOC report for the second half of 2014, the central bank's foreign assets fell by 155 billion renminbi ($25 billion), compared to a 1.5 trillion renminbi increase for the second half of 2013. Meaning, the PBOC sold foreign assets on net, and when it does that, it buys renminbi, absorbing it and directly shrinking the money supply. That drop continues even now.