China will tighten monetary policy in 2011

China's leadership called on Friday for tighter control over bank lending and other spending next year, a shift in strategy as Beijing fights inflation and tries to guide rapid growth to a sustainable level.

China's leadership called on Friday for tighter control over bank lending and other spending next year, a shift in strategy as Beijing fights inflation and tries to guide rapid growth to a sustainable level.

HT Image

The ruling Communist Party's top body, the Politburo, ordered the switch in monetary policy “from relatively loose to prudent,” the government's Xinhua News Agency said.

The announcement reinforces a change in direction charted this year of modest tightening after the government and banks flooded the economy with easy money to effectively ward off the global economic crisis in 2009.

Beijing raised interest rates October 19, highlighting its divergence from the US and other major economies, which are trying to boost growth.