Punching Liquidity Harder.

The article focuses on the rise in the reserve requirement ratio in China. On June 7, 2008, the People's Bank of China announced to raise the reserve requirement ratio to 17.5%, which is the fifth hike for this year in an effort to control the cash circulation. The increase in reserve ratio has a negative effect to the bank's profit and puts pressure on real estate companies. Shanghai Composite Index dropped to 7.73% on the first day of announcement, which is the biggest drop in 16 months, and followed by another 1.57% on the next day.