China Curbs Money Supply Growth
China Tries to Cool Economy by Curbing the Supply of Money (Austin-American Statesman): "China is trying to stem pressures that could ignite inflation, warning of dangers from excessive spending on real estate and an influx of money from currency speculators, state media said Monday. China's central bank announced steps during the weekend to tighten what it called excessive bank lending in an effort to stave off possible inflation. It increased a reserve requirement on the country's commercial banks, allowing it to curb money supply growth in an economy expanding at more than 8 percent a year as it tries to reduce corporate defaults. Central bank officials said this month that excess money supply -- coming largely from rising exports to the United States that are bought with U.S. dollars -- and runaway credit might hurt the economy. China's financial institutions made loans at the fastest pace since 1996 in July. New loans in the period from January to July soared to $228.8 billion, more than the $216.9 billion that they lent in all of 2002, government figures show. China's inflation fears come as the country has emerged as a crucial growth market for many U.S. companies -- especially high tech. The demand has helped soften the economic slump elsewhere in the world."
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