China cuts some banks’ reserve requirements to spur growth

China’s central bank said on Sunday it would cut the amount of cash that most banks must hold as reserves to lower financing costs and spur growth, amid concerns over a potential economic drag from an escalating trade dispute with the United States.

The reserve requirement cut, the fourth by the People’s Bank of China (PBOC) this year, comes after Beijing has pledged to expedite plans to invest billions of dollars in infrastructure projects as the economy shows signs of cooling further, with investment growth slowing to a record low.

Reserve requirement ratios (RRRs) – currently 15.5 percent for large institutions and 13.5 percent for smaller banks – would be cut by 100 basis points effective Oct. 15, the PBOC said.

The central bank will inject a net 750 billion yuan ($109.2 billion) in cash into the banking system with the cut by releasing a total of 1.2 trillion yuan in liquidity, with 450 billion yuan of that to offset maturing medium-term lending facility (MLF) loans.

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