BEIJING — China ordered its banks Friday to hold more money as reserves in a new move to curb lending and rising inflation that communist leaders worry might stir unrest.
It was China’s second reserve increase in two weeks and came as Beijing tries to restore normal financial conditions following its recovery from the global crisis and cool inflation that surged to a 25-month high in October.
The move comes amid heightened tensions between the United States and China over the nations’ currency and economic policies. Critics charge that China could cool its economy and tame inflation by letting its currency, the yuan, float freely against the dollar.
China has steadfastly refused, keeping the yuan closely tied to the dollar. That makes its exports cheaper overseas and U.S. products less competitive in China. U.S. manufacturers and members of Congress charge that gives China an unfair advantage.
Federal Reserve Chairman Ben Bernanke added his voice to the critics on Friday. China’s policy of keeping the yuan artificially cheap is distorting the global economy, he said.
China is not likely to change its currency policy under pressure from the U.S. But it is taking steps to cool its economy. Analysts expect China to announce an interest-rate hike before the end of the year, its second after a surprise increase Oct. 19, but there was no word Friday of any changes in rates.
