Staff of Reuters Read for 2 minutes (Adds details) (Reuters) – BEIJING, July 9 (Reuters) – China will reduce the amount of cash banks must maintain as reserves, releasing about 1 trillion yuan ($154.19 billion) in long-term liquidity to support the country’s slowing post-COVID economic recovery. The People’s Bank of China said on its website that starting July 15, the reserve requirement ratio (RRR) for all banks will be reduced by 50 basis points (bps). The world’s second-largest economy has mostly recovered to pre-pandemic levels of growth, thanks to a remarkably resilient export sector. However, growth is slowing, and smaller businesses are facing the brunt of recent raw material price increases. Many analysts predict that pent-up COVID demand has peaked, and that growth rates will begin to drop in the second half of the year, dragged down by faltering exports, rising producer price inflation, and Beijing’s continuous housing market crackdown. After the cut, the weighted average RRR for Chinese financial institutions will drop to 8.9%, according to the central bank. Banks that are subject to a 5% RRR will be excluded from the new reduction. The RRR was last trimmed by the PBOC in April of last year, when the Chinese economy was still reeling from the coronavirus outbreak. The PBOC changed to a mildly tightening stance as the economy began to recover. In a surprise revelation to the markets, China’s cabinet announced on Wednesday that authorities would employ timely RRR cuts to help small businesses cope with the negative impact of rising commodity prices. ($1 = 6.4854 Chinese yuan renminbi renminbi renminbi renminbi renminbi renminbi (Reporting by Stella Qiu, Judy Hua and Kevin Yao; Editing by Sam Holmes and Gareth Jones)/n
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