In the wake of a bank reserve hike on Friday, the Central Economic Work Conference in China, chaired by President Hu Jintao, ended Sunday with the issuance of a policy statement that shifts toward fighting inflation. On Monday that strategy shifted into high gear with the extension of a special increase in reserve requirement ratio (RRR) for six of China’s biggest lenders.
Reuters reported that the country is moving toward promotion of domestic consumption as a hedge against falling exports. Leaders said they would cap banking system liquidity and steer more bank loans into the real economy in the wake of inflation that in November rose to a 28-month high and seemed poised to move beyond food prices.
While exports have not fallen—in fact they jumped 34.9% in November from November of 2009—concerns over a drop in consumption in the rest of the world have fueled China’s policies. Chinese imports have also skyrocketed, gaining 37.7% in November compared with November of 2009.