China Moves to Tighten Credit Amid Fears of Overheating – Jane Padgham

From The Independent Online: China yesterday tightened its grip on credit in an attempt to prevent the torrent of cash generated by its ballooning trade surplus from overheating the economy.

In a surprise announcement on the eve of the Chinese new year holidays, the People’s Bank of China ordered lenders to park another half a per cent of their deposits at the central bank instead of lending the money out.

From 25 February, when the week-long holiday comes to an end, the big banks will have to put 10 per cent of their deposits in reserve, while the figure for smaller banks rises to 10.5 per cent. India unveiled a similar change in policy earlier this week.

The announcement of the move – the fifth such tightening since last June and the second this year – came a day after the central committee of the ruling Communist Party said that controlling investment and credit growth would be a key policy task this year. [Full Text]


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