China's central bank acted to release cash into the economy to support growth, cutting the amount of cash lenders must hold as reserves by 1 percentage point.
In addition, the central bank will likely inject more funds to the banking system through TMLF loans, a RRR cut or a targeted RRR cut around the Chinese New Year holiday falling on 5 February this year.
China made its first major monetary policy easing announcement of 2019 on Friday as Beijing prepared to roll up its up sleeves to battle a year that is expected to be filled with economic hardship as well as numerous other challenges at home and overseas, Trend reports referring to South China Morning Post.
The People's Bank of China said on Friday that reductions by 0.5 percentage points will be made on January 15th and again January 25th.
Beijing has been stepping up its efforts in stimulating growth, which is decelerating quickly amid the trade war with the United States.
"The old playbook of China's economy seems to be back", said Shao Yu, chief economist at Orient Securities in Shanghai.
China's economy grew at an annualized rate of 6.5 percent in the July-September period of 2018.
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China's economic growth is expected to have cooled to around 6.5 percent previous year, in line with Beijing's target but down from 6.9 percent in 2017.
Li said China will strengthen the scale of its counter-cyclical adjustments of macro policies and further cut taxes, while urging banks to take full advantage of tools including reserve ratio cuts, and to support private and small businesses' financing needs.
The PBOC had cut reserve requirement ratios for some banks four times in 2018, and recently introduced a targeted version of its Medium-Term Lending Facility to supply lower-cost funding to banks, a move analysts see as a toned-down version of rate cut. "The central bank has been handing liquidity to the banks, but the banks are unwilling to lend".
Further cuts in the RRR had been widely expected this year, especially after a spate of weak data in recent months showed China's economy was continuing to lose steam.
A manufacturing purchasing managers' index released this week by Caixin dipped into contraction territory for the first time in 19 months, painting a gloomy outlook for the world's second largest economy, and effecting market sentiment.
But the central bank said growth was still within a reasonable range and it would continue to implement a prudent monetary policy, without engaging in massive stimulus.