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China's central bank announced a targeted reserve requirement ratio cut to free up funds for small and medium sized firms.
The People's Bank of China on Saturday reduced the amount of cash that banks should hold as reserves, from next year.
The action applies to 90 percent of city commercial banks and 95 percent of rural commercial lenders. The RRR cut range between 0.5 percentage point and 1.5 percentage point depending on the volume of business banks do with smaller firms and agricultural borrowers.
The central bank said the reduction is a "structural adjustment" and it is not a shift in monetary policy. Policymakers reiterated that they plan to keep monetary policy "prudent and neutral".
