China has raised cash reserve requirements for banks
the amount of money they have to set aside against
loans for the fifth time in eight months to rein
in inflation and cool investment in the world's fastest-growing
People's Bank of China said in a statement that lenders
must put aside 10 per cent of deposits beginning February
25, against 9.5 per cent at present.
central bank expects the 0.5 percentage point increase
in the reserve ratio to reduce the amount available for
lending with banks by 150 billion yuan ($19.4 billion).
economy, the world's fourth largest, expanded 10.7 per
cent last year, more than triple the pace of growth in
prices rose by 2.8 per cent and 2.2 per cent, respectively,
in December and January.
While producer prices rose the highest in five months
in January, investment and lending is also seen rebounding,
which would increase the risk of accelerating inflation,
the central bank said.
in loans accelerated to 16 per cent in January, from 15.1
per cent the previous month, the statement said.
People's Bank raised the key lending rate in April and
August, by 0.27 percentage point each time. The benchmark
now stands at 6.12 per cent.
export earnings are pumping cash into China's financial
system, raising the risk of boom-and-bust cycles in the
trade surplus is expected to increase this year to $200
billion from $177.5 billion in 2006 while the US trade
deficit with China reached a record $232.5 billion last
yuan also rose to the highest up 0.16 per cent
to 7.7426 per dollar in Shanghai since a link to
the dollar ended in July 2005.