China increased reserve requirements at banks in a bid to control inflation and head off a potential credit bubble.

State-owned banks must set aside an extra 0.5% of deposits as reserves, starting Nov. 29. That means some lenders could be setting aside as much as 19% of deposits, The Associated Press said.

It's the second time this month that China has ordered banks to hold bank more reserves. Inflation hit 4.4% in October, the highest in more than two years. The official target for inflation is 3%

Chinese officials are worried about the impact of high inflation on poor families that spend as much as half their incomes on food.

Growth in the world's second-largest economy hit an annual rate of 11.9% in the first quarter of this year, before falling to 9.6% in the third quarter.

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The Obama visit to India has interesting timing. India has reportedly the highest inflation rate for a significant economy at 10% and shares along with Peru and Ukraine a 50% rise in commodities such as food. Silence Chinese complaints by getting chummy with rival India? There is an intensification in trends from the Noughties decade brought on by many of the same crowd and it's not good for the people of America, India or China.

November 19 2010 at 5:57 PM Report abuse rate up rate down Reply