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The Honolulu Advertiser
Posted on: Saturday, February 13, 2010

China's banks raise reserves to limit lending

Associated Press

Hawaii news photo - The Honolulu Advertiser

A worker rests at a construction site in Guangzhou, China. Amid fears of a real estate bubble, China ordered its banks yesterday to restrain lending.

Associated Press

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BEIJING China moved to curtail bank lending yesterday for the second time in a month in the latest effort to cool down its supercharged economy.

Chinese leaders worry that a stimulus-driven torrent of lending is fueling a dangerous bubble in stock and real estate prices. They also are concerned that the flood of money surging through the economy is adding to inflation.

Beijing declared China had emerged from the global crisis after economic growth rebounded to 10.7 percent in the final quarter of 2009. But authorities say the global outlook is still uncertain, and analysts expect them to try to avoid rate hikes even as they start winding down their stimulus.

Banks were ordered to increase reserves by half a percentage point to 16.5 percent for large lenders and to 14.5 percent for smaller institutions. Rural lenders that serve farmers were exempted to guarantee adequate credit for agriculture.


WASHINGTON A modestly better-than-expected report on retail sales for January could suggest stronger economic growth ahead. But this week's severe snowstorms will likely depress activity in February.

The 0.5 percent gain the Commerce Department reported yesterday exceeded the 0.3 percent rise economists had expected. Strength came from a surge at general merchandise stores. These include big chains such as those owned by Wal-Mart Stores Inc.

Higher consumer spending is vital because it accounts for about 70 percent of economic activity. Economists caution, though, that the spending increases seen since summer could falter if the jobs crisis persists.

They noted a second report that showed consumer confidence slipped in early February. The Reuters/University of Michigan consumer sentiment index dipped to 73.7 for early February, down from 74.4 in January.