China Rattles Global Markets by Tightening Requirements

[I AM NOT THAT GUY 5,715]

China surprises by raising banks' required reserves

BEIJING (Reuters) - China sprung a surprise on global markets on the eve of its New Year's holiday with an increase in banks' reserve requirements, a move that can slow bank lending and tamp down on rising inflation.

Although investors had been expecting the People's Bank of China to push the reserve requirement ratio higher after an increase last month, few thought the second rise would come so soon.

Markets were rattled by fears that the pace of monetary tightening in China would be more aggressive than had been reckoned on, potentially denting global growth.

Investors pulled back from riskier assets, buoying the dollar which rose 0.7 percent against a basket of currencies. Stocks fell, while European and U.S. bonds jumped.

"The central bank is sending clear messages to banks that it wants more reasonable bank lending and it is paying close attention to inflation," Xie Xuecheng, an economist with Southwest Securities in Beijing, said.

The 50 basis point increase comes into force on February 25.

The surprise was all the greater since China on Thursday had reported an unexpected slowdown in consumer price inflation in January to 1.5 percent.

http://finance.yahoo.com/news/China-surpri...ml?x=0&.v=2

[justashooter 430]

everybody who has done business in china knows that their banks are nothing more than fronts for the ambition of the state. everybody who has done business in china knows that most chinese peasants have all of their money tied up in savings in banks that have "lent" it to state owned enterprises 3 times over, with no expectation of repayment. everybody who knows anything about china knows that the CCP is trying to make banks more accountable as the province governments bleed them dry to enhance their own prestiege by building useless stadiums that are brightly lit year round and never seated.

if the truth were to ever come out, or more than 5% of the chinese peasants were panicked enuf to withdraw funds, everybody else would be left holding paper. you would see pictures of banks and government offices burning, and angry mobs hanging politicians by the neck until dead. chinese government knows that for thousands of years chinese governemnts have been replaced by angry mobs from time to time...

[Darnell 8,478]

Well it was interesting news, la.

ALL CHINA COMPANIES that trade on US Stock markets tumbled , Thursday and Friday, supposedly as a result of this news.

Should be some great bargains on Tuesday, circa 11:00 AM EST. If yer buying, that is

[Darnell 8,478]

sorry, didn't make much time for commentary, was watching the Olympics, la.

The stock markets in Shanghai and Shenzhen are 'back room' controlled by CCP, actually, and usually they 'order' stock upticks and downturns, and the buy/sell orders go in. The little investors don't find out about this stuff for at least 3 days after, and by then , it's too late to take a decent 'profit'.

For the Banks to make 'this reserve', IMO, is silly, but really 're-aligns' China Banks, and the Banks that do business with China Banks. It'll have some repercussions, you betcha, all over the world.

I'd watch Brasil's reaction first, if I were you , as Brasil is 'cash rich' and has some obligations to China..