China tightens bank holding requirement

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- China, in response to the Federal Reserve's move to inject billions into the U.S. economy, has raised the reserve requirement ratio on major banks in an attempt to control its flow of new money.

The People's Bank of China raised the ratio by half a percentage point between now and Nov. 16.

Mark Williams, senior China economist for Capital Economics Ltd. in London, said the new ratio is unknown, but it's probably 18.5%.

"The reserve ratio hike helps the People's Bank to mop up some of the currency flowing into the Chinese economy from strong exports and inward investment," he said. "But the move also allows policymakers to signal their continued concern about the current pace of loan growth."

The Chinese government is one of several that has been critical of the Fed's decision last week, calling it inflationary. U.S. officials, on the other hand, have been trying to get Beijing to increase the value of its currency in order to help spur a global economic recovery. (It's not just the dollar's fault)

The reserve ratio increase is completely separate from the currency controls that the People's Bank imposes on the renminbi every day.

The move came after China announced that its trade surplus surged in October to $27.2 billion, up more than 60% from its September surplus of $16.9 billion. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.95%3.94%
15 yr fixed3.05%3.02%
5/1 ARM3.34%3.48%
30 yr refi4.02%4.01%
15 yr refi3.13%3.10%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 18,135.72 38.82 0.21%
Nasdaq 4,982.81 15.67 0.32%
S&P 500 2,101.04 2.51 0.12%
Treasuries 2.11 -0.01 -0.52%
Data as of 9:29pm ET
Company Price Change % Change
Bank of America Corp... 16.00 0.16 1.01%
Apple Inc 126.41 -2.13 -1.66%
AbbVie Inc 56.86 -3.41 -5.66%
Avon Products Inc 9.05 -0.05 -0.55%
General Electric Co 25.82 0.16 0.62%
Data as of 4:02pm ET
Sponsors

Sections

The company Allstar allegedly lured customers in with misleading TV commercials and then overcharged them. More

Wage growth has become the central focus of the economy's health. It will impact workers and investors. More

Frank & Oak, Airbnb, and Net-a-Porter are just a couple of companies investing in the antiquated medium. More

Lawmakers and consumer advocates are speaking out against the special treatment given to debt collectors hired by government agencies across the country. More