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China drains liquidity from markets ahead of Lunar New Year

Unusual step designed to keep stocks and real estate from overheating

China usually pumps liquidity into the markets ahead of Lunar New Year, a peak time for travel in the country.   © Reuters

SHANGHAI -- China has withdrawn 320 billion yuan ($49.5 billion) from financial markets in about two weeks, as authorities focus on removing excess liquidity to tame the surge in property and asset prices.

It is rare for China to curb liquidity ahead of the Lunar New Year holiday, which starts on Thursday this year. The move could hinder the country's economic recovery from the coronavirus-induced slump, with effects spilling into overseas markets as well.

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