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 fixed3.84%3.80%
15 yr fixed3.06%3.03%
5/1 ARM3.14%3.15%
30 yr refi3.91%3.86%
15 yr refi3.16%3.08%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,712.66 34.43 0.19%
Nasdaq 4,891.22 27.86 0.57%
S&P 500 2,061.02 4.87 0.24%
Treasuries 1.95 -0.06 -2.94%
Data as of Mar 28
Company Price Change % Change
Intel Corp 32.00 1.92 6.38%
Bank of America Corp... 15.31 -0.11 -0.71%
Ford Motor Co 15.98 -0.03 -0.19%
Apple Inc 123.25 -0.99 -0.80%
Microsoft Corp 40.97 -0.24 -0.58%
Data as of Mar 27
Sponsors

Sections