China Steps On The Economic Accelerator

on December 01, 2011 at 6:00 AM


China is cutting the amount of money banks need to hold in reserve, freeing those funds to stimulate the Chinese economy. The People’s Bank of China said Wednesday it will lower its reserve requirement ratio for financial institutions by half a percentage point. It was the first such cut in the ratio since 2008, and a change in course after the ratio was raised five times this year. The cut is effective Dec. 5. The move is intended to increase liquidity, ramping up the flow of money into the economy to make up for concerns about slackening demand for Chinese products both domestically and abroad, particularly from Europe. This article is a linkout.