BBC World Service

China raises bank reserve requirements

Chris Hogg Apr 18, 2011
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BBC World Service

China raises bank reserve requirements

Chris Hogg Apr 18, 2011
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STEVE CHIOTAKIS: There’s been another attempt by China to curb soaring inflation. Prices on things like property and food have been shooting up in the country. And now for the fourth time this year, banks have been told to loan less and keep more money in reserve.

From Beijing, here’s the BBC’s Chris Hogg.


CHRIS HOGG: Prices in China are rising at their fastest rate in three years. The latest annual inflation figure is 5.4 percent.

And new figures out show the economy is still expanding rapidly — at a remarkable 9.7 percent a year — much more than any other big economy.

The Central Bank is trying to get a hold on all this — desperate to try and cool things down.

But Peter Hoflich from Asian Banker magazine thinks these measures can only have a limited effect.

PETER HOFLICH: China’s economy is just too hot, so I think it’s going to really take a very long time for them to kick in, Also they’re very limited in the number of policy tools that they can use.

Tackling inflation is a major priority for the Chinese government. If they can’t bring it down, it could spark protests from people struggling to pay for food.

Plus, there are fears that if wages and prices spiral too high, foreign companies may decide China is no longer the cheapest place to set up shop — sending foreign investment elsewhere.

In Beijing, I’m the BBC’s Chris Hogg, for Marketplace.

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