PBOC’s ‘Vicious Cycle’ Worsened by Fed, Yu Says: China Credit

Moves by the U.S. Federal Reserve to print cash would spur capital flows into China, hampering the Asian nation’s efforts to damp inflation and counter yuan gains, said Yu Yongding, a former central bank adviser.

The People’s Bank of China sold a net 209.7 billion yuan ($32 billion) of bills during the last nine months, following net redemptions of 579.5 billion yuan in 2009. It raised the reserve-requirement ratio last week for six banks, including the largest four, by half a percentage point for the fourth time this year, a move China Securities Co. estimated will cut lending by 170 billion yuan.