China to Tighten Monetary Policy in 2011

Chinese leaders say they will tighten monetary policy in 2011, a sign that authorities are increasingly concerned about rising inflation.

The Politburo decided that China's monetary policy should shift "from relatively loose to prudent next year," The New York Times said, citing a report in state news agency Xinhua.

The Politburo is an elite nine-member team at the top of the political hierarchy.

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Chinese inflation hit an annual rate of 4.4% in October, the highest in more than two years. The country's rapid economic growth and growing consumer spending have helped to stoke price increases.

Authorities have raised the benchmark lending rate and bank reserve requirements in an attempt to cool spending and head off a potential credit bubble.

Still, the Politburo said that China "will continue its proactive fiscal policy," suggesting that it will not drastically reduce investment spending.