The Chinese central bank announced over the week end that it would cut bank's reserve requirement ratio (RRR) by 0.5 per cent from 18 May, for the second time this year, in order to pump in more liquidity against the backdrop of current slowdown in its economic growth.
This move is expected to bring in additional 400 billion yuan ($63.4 billion) into the financial system. Previously China had lowered its RRR by 0.5 per cent in February.
The cut will lower the RRR for the country's large financial institutions to 20 per cent and medium and small-sized financial institutions to 16.5 per cent, People's Bank of China said.
Latest data released on industrial production, investment and trade indicate the world's second-largest economy continued its slowdown in April, at a higher pace than economists anticipated.
"From the April economic data released recently, we can see that China's foreign trade, investment, tax revenue and credit have all showing signs of slowdown in growth," quoting Lian Ping, chief economist of Bank of Communications, Chinese news agency Xinhua reported.
The Chinese central bank slashed the RRR in December 2011 for the first time in three years, after raising it six times to tame inflation.