HONG KONG (AP) — China will slow its massive lending spree and step up monitoring of banks as it tries to prevent speculative bubbles in real estate and other assets while keeping the country's economic recovery on track, a top regulator said yesterday.

China's banking system is healthy despite last year's explosive growth in credit and regulators could manage the risks, said Liu Mingkang, chairman of the Chinese Banking Regulatory Commission.

"We are confident that risks envisaged could be well absorbed," Liu said at a financial forum in Hong Kong.

Record bank lending in 2009 to support government spending on infrastructure and other projects under Beijing's stimulus package has led to fears of asset bubbles and huge bank losses if too many loans sour.

After handing out some 9.5 trillion yuan ($1.39 trillion) in loans last year, banks were expected to scale back lending to roughly 7.5 trillion ($1.09 trillion) in 2010, Liu said.

The total amount of loans will grow by as much as 18 percent in 2010 year over year, compared to nearly 32 percent in 2009, he said.

"We shall control, and we have controlled, the credit growth the whole year round," Liu said. "This year we will continue to control the pace and amount of the credit supply."

Already, "corrective actions" have been taken against banks that lent too much or made bad loans to root out "excessive" exposure, consumer credit card risks and other problems, he said.

Regulators were paying special attention to loans for local government projects and real estate. All banks have been ordered to "heighten their vigilance against an impossible, embedded credit risk," Liu said. New leverage and liquidity restrictions would be imposed, he added.

This month the government tightened restrictions to help curb riskier lending, dampen rising asset prices and ensure banks have enough money to handle losses.