CHABCHA COUNTY, CHINA (REUTERS) - The streets of Chabcha county in western Qinghai province were quiet on Saturday as Tibetan monks marked the Dalai Lama's birthday in their homes, wary that any public celebration could endanger a tentative softening by the Chinese authorities.

Tibetans in China have always had to steer clear of public ceremonies revering their 78-year-old exiled spiritual leader who Beijing has denounced as a "wolf in monk's robes". But in the run-up to this year's anniversary, the authorities in Qinghai discussed proposals to ease restrictions, including allowing Tibetans to openly display photographs of the Dalai Lama, the International Campaign for Tibet said. On Saturday, however, there was no sign of any celebration, with many ordinary Tibetans not even aware it was his birthday.

At the Kumbum monastery close to Qinghai's capital, Xining, monks prayed in a room next to another that was built as a shrine to the Dalai Lama, whose photograph was displayed.

"We'll celebrate his birthday at our homes privately, but we'll never do it in the open," said the Venerable Khedroob, 40, a monk at the Kumbum monastery. "But we don't have to wait for a special day to celebrate, we celebrate him everyday."

Ven Khedroob said he received a text message on his mobile phone that the authorities in Qinghai have discussed allowing Tibetans to display images of the Dalai Lama, but added he did not know whether to believe it.

Officials had also discussed the possibility of ending the practice of forcing Tibetans to denounce the Dalai Lama and to reduce the police presence at monasteries, the International Campaign for Tibet said last week. The report triggered speculation that the authorities are contemplating looser religious restrictions in the Tibetan regions of China.

The speculation has been fuelled, in part, by an essay written by a scholar from the Central Party School, who said China could take some steps toward resuming talks with the Dalai Lama's representatives, which broke down in 2010. That essay has given hope to observers looking for signs of change from Chinese President Xi Jinping, who took office in March.

China's State Administration of Religious Affairs denied that the government is changing its policy towards the Dalai Lama. In a faxed reply to Reuters, the agency said the Dalai Lama has to give up his stance on independence for Tibet.

Beijing considers the Dalai Lama, who fled China in 1959 after an abortive uprising against Chinese rule, a violent separatist. The Dalai Lama, who is based in India, says he is merely seeking greater autonomy for his Himalayan homeland.

Still, the timing of these possible policy shifts suggests that the Chinese Communist Party hopes to defuse tensions that have mounted since 2008, after riots that broke out in the Tibet Autonomous Region and the Tibetan parts of China led to a government crackdown.

If China was to allow grassroots worship of the Dalai Lama in Qinghai and neighbouring Sichuan, it would mark a reversion to the norm before 2008, according to Professor Robbie Barnett, director of modern Tibet studies at Columbia University.

It is unclear whether these adjustments were mandated by Beijing, but there are signs that the new leadership is becoming more pragmatic when it comes to policy on Tibet, Prof Barnett said.

"Under (former President) Hu Jintao, the pragmatists kept quiet or convinced themselves to accept the Hu Jintao hardliner approach," he said. "Now, they are shifting and indicating that was a failure."

"But whether they can overcome internal resistance to change, and how far any change could go, that is the big question."