The reserves that are needed by commercial banks in the central bank will be increased according to the Chinese government. This policy is due to the large trade surplus in the previous month as exports and imports shoot up and became strong for the Chinese economy.
The required increase is at 50 basis points for the reserve requirements as specified by the central bank. It is the sixth time that this type of policy was implemented so that the liquidity of the economy of the Republic of China will be slowed down.
The trigger for this move of the Chinese government came after the market figures that showed the Chinese economy might be overheating in a rate that they cannot handle.
The forecasts for China’s growth rate are way under the actual figures. The exports grew at 34.9% in November while in October they were at 22.9%. The imports are at 37.7% this November while they were at 25.3% in October.
There was a trade surplus that was recorded in November at $22.9B and $27.15B in October. Even if the recorded figure for November was down, it is still one of the biggest in Chinese economy history.
The surge in exports and imports this year in the Chinese economy is a result of the financial policy that the China implemented over their currency. Many economists and financial analysts say that the renminbi may be becoming weaker and so the Chinese government let it appreciate quickly than it is supposed to resulting to a fast surge in their economy.
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