China eases bank restriction to boost growth

@CNNMoney February 20, 2012: 8:38 AM ET

NEW YORK (CNNMoney) -- China's central bank said it would cut the amount banks must hold in reserve, a step toward boosting lending and maintaining strong economic growth.

The People's Bank of China said it would cut the so-called reserve requirement by 0.5%, the second such move in three months, following several increases since 2008.

The decision comes as China tries to pull off a soft landing: It must let economic growth slow enough to prevent inflation -- but it doesn't want growth to slow too much.

Inflation in China is already a concern, rising at a rate of 4.5% as of January, though that is more tame than last summer when prices were rising 6.5%. Food prices were up 10.5% in January.

The Chinese economy grew at an annual pace of 8.9% in the last three months of 2011.

China, the world's second largest economy behind the United States, has grown at an average annual rate of about 10% for the past 30 years.

A growing chorus of skeptics say China's economy is a bubble set to burst. They worry about massive over construction that has resulted in empty buildings and infrastructure projects of little value.

Most notable is short-seller Jim Chanos of Kynikos Associates. "We are seeing rapid falloffs in demand in things like construction equipment, railway construction over there, housing sales -- so lots of things are slowing down pretty quickly over there," Chanos said in an interview with CNNMoney this week.

Chanos also thinks the Chinese government is over-stating growth and understating inflation. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.82%3.84%
15 yr fixed2.96%2.94%
5/1 ARM3.25%3.31%
30 yr refi3.82%3.85%
15 yr refi3.02%3.02%
Rate data provided
View rates in your area
Find personalized rates:
Economic Calendar
Latest ReportNext Update
Home pricesAug 28
Consumer confidenceAug 28
GDPAug 29
Manufacturing (ISM)Sept 4
JobsSept 7
Inflation (CPI)Sept 14
Retail sales Sept 14
CNNMoney Sponsors

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.