China’s leadership calls for tighter monetary policy in 2011 as Beijing fights inflation
China’s leadership ordered a shift from easy credit to a “prudent monetary policy” on Friday as Beijing steps up its fight against inflation and tries to guide rapid growth to a sustainable level.
The ruling Communist Party’s top body, the Politburo, decided to “implement an active fiscal policy and a prudent monetary policy” in 2011, said a Cabinet statement.
The government is trying to cool inflation that spiked to 4.4 percent in October — well above the official 3 percent target — driven by a 10.1 percent jump in food costs. Analysts say November inflation might rise still higher.
Chinese regulators also have reined in credit by forcing banks to hold back more money as reserves and tighten lending standards.
Economic growth eased to 9.6 percent in the three months ending in September after hitting a post-crisis peak of 11.9 percent in the first quarter. The World Bank and private sector economists expect full-year growth of up to 10 percent.