The People’s Bank of China announced on Wednesday that it would cut banks’ reserve requirement ratio–the amount of money banks must hold in reserve and therefore not lend out–by 50 basis points to 21.5 percent. The move to ease the country’s tight domestic liquidity conditions came sooner than expected and suggested to analysts that the government was shifting economic policy from controlling inflation to spurring economic growth. Fears of runaway inflation have led China’s policymaker to raise interest rates three times this year and hike the reserve requirement ratio six times. However, inflation fell to 5.5 percent in October, down from a three-year high of 6.5 percent in July. Analysts believe China’s inflation for November, may have declined further to 4.3 percent. Moderating inflation gave Chinese authorities leeway to shift economic policy back to stimulating growth, analysts said. 

China’s manufacturing activity contracted in November suggesting that anemic growth in the US, a spreading sovereign debt crisis in Europe and government measures to slow growth have begun to take a toll on China’s economy. China’s Purchasing Managers’ Index (PMI) for November declined to 49 from 50.4 the previous month, the first contraction in two years. Reading below 50 suggest that manufacturing activity is contracting. A separate PMI measure released by HSBC earlier this week showed that PMI fell to 47.7 in November from 51 in October.

After a one-day rally following Beijing’s actions, China stocks fell for the fourth week. The Shanghai Composite Index rose 2.3 percent on Thursday after China announced that it would cut the reserve requirement ratio for banks. However these gains were short lived and the benchmark index fell 0.8 percent for the week, for a yearly slump of 16 percent.

South Korea’s exports remained resilient in November amid persistent inflation and an uncertain global economy. The country’s exports rose 13.8 percent year over year in November, resulting in a USD3.9 billion trade surplus. Inflation in the country rose 4.2 percent in the month, just above the government’s target range of 2 percent to 4 percent. The country’s PMI fell to 47.1 in November from 48 the previous year, marking the fourth straight month in which manufacturing activity contracted.

India’s economy grew at its slowest pace in more than two years during the last quarter. The country’s gross domestic product climbed 6.9 percent in the three months through September, according to data from India’s Central Statistical Office. The Reserve Bank of India has raised interest rates aggressively to tame high levels of inflation in the country. Manufacturing in India grew by 2.7 percent in the quarter, down from 7.2 percent the previous quarter.