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China to cut banks' reserve requirements as economic growth loses steam

China slashed the amount of money that banks must keep in reserve in a bid to support lending amid a slowing economy.

The People's Bank of China will cut banks' reserve requirement ratios by 0.5 percentage point Jan. 15 and by another half-percentage point Jan. 25. The Chinese central bank added that the medium-term lending facility that will expire in the first quarter will not be renewed.

The moves are expected to release 800 billion yuan in long-term incremental funds, and are the latest in a series of measures aimed at stimulating lending to enterprises.

China in late 2018 pledged to cut taxes and fees, as well as maintain a prudent monetary policy amid a string of disappointing macroeconomic data, including weaker-than-expected annual GDP growth in the third quarter of 2018.

As of Jan. 4, US$1 was equivalent to 6.87 Chinese yuan.