Beijing, Oct 8 : Amidst an escalation in trade war with US, China has decided to cut the amount of cash banks must hold in reserve for the fourth time in this year to support its economy.
The move will see 750 bn yuan ($109bn; £83bn) in cash injected into the financial system of the country. The US-China trade tiff threatens the outlook for Chinese manufacturing and exports.
China's central bank said that it would cut reserve requirement ratios by 100 basis points from Oct 15, which is currently 15.5 per cent for large commercial lenders and 13.5 per cent for smaller banks. Cutting reserve requirements will free up money for banks to lend to each other and consumers.
The People's Bank of China's move will release 1.2 trillion yuan in liquidity, with 450 bn yuan of that due to offset maturing loans - meaning 750 bn yuan will be injected into the financial system. It comes in the wake of tariffs imposed by both US and China on each other.
While US has imposed tariffs on virtually half of all Chinese imports into the US, China has retaliated with its own set of tariffs, and has accused US of launching the largest trade war in the economic history. Neither of them are willing to back down on escalating matter. (UNI)