China’s Central Bank Hits Brake on Hot Economy

During the recession most countries are trying to energize their economies, but China is doing the opposite. The Chinese central bank announced Friday that they are reducing lending to companies and individuals by requiring commercial banks to increase the amount of money they put in reserves. This is the second time in a month that China's central bank increased the required reserves for the commercial banks. The Chinese predict that they will have a growth of 10% this year due to a revival of exports, strong consumer spending and investment in infrastructure. China is walking a thin line by trying to control their inflation because it is risking global growth, sending countries back into recessions. China's success comes because of their low producer costs, government infrastructure investment, and a half-trillion dollar stimulus plan. Families are buying cars, houses and other large price items at an alarming rate because the government told banks to lend to everyone giving companies and families extra spending money.