China Cuts Amount Banks Can Lend, in Sign of Inflation Worries

After ordering banks to flood the economy with cash to rescue growth, China changed direction on Tuesday and sucked back funds, in the clearest signal yet that the government is worried that the credit binge now risks igniting inflation.

The People's Bank of China, the central bank, announced a reduction in the amounts banks will have available to lend.

The move represented a shift away from the giant stimulus effort that carried China through global financial turmoil and is poised to catapult the country past Japan this year as the world's second largest economy after the U.S. The Chinese economy has rebounded strongly, with property prices sizzling in major cities, a recovery in exports and, recently, a rush of inward investment.

Read Full Article from Wall Street Journal

- Posted: 2010-01-12 11:52:53

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