China is set to reduce cut banks' reserve requirement ratios (RRRs) amid slower economic growth.
The cut in banks' reserve requirement ratios (RRR) is the first in 2019 and the fifth in a year by the People's Bank of China (PBOC) as the economy faces its weakest growth since the global financial crisis and mounting pressure from USA tariffs.
The measures will also include targeted RRR cuts aimed at supporting small and private companies, Mr Li was quoted as saying in a statement on the website of the Chinese government.
China's central bank said Friday it is cutting the amount of cash that large banks must hold as reserves, to ease credit and boost economic growth given the negative impact of an ongoing trade war with the United States.
This RRR standard adjustment has also triggered the market's expectation of further cuts.
According to numbers China released earlier this week, factory activity declined in December for the first time in more than two years, suggesting that the business environment is likely to become worse.
"This speedy RRR cut with great intensity fully demonstrates the determination of policymakers to stabilise growth", said Yang Hao, an analyst at Nanjing Securities.
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"Looking ahead, China's key policy challenge is to manage trade-related headwinds while maintaining efforts to limit financial risks", the bank said its latest assessment on the world's second-largest economy.
According to a survey released by the PBOC on Christmas Eve, in the fourth quarter 81.2pc of the participants from the banking sector said the current monetary policy is "appropriate", 4.1 percentage points higher than in the third quarter.
The latest reduction announced is the first all-inclusive RRR cut since March 2016.
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.
The government maintains last year's economic growth will be on target at around 6.5 per cent, slowing from 6.9 per cent in 2017.
A further deceleration is seen this year, with some analysts forecasting growth will cool to almost 6 percent, which would mark China's weakest expansion since 1990.
This will allow banks to lend more capital to enterprises now classed as small businesses, and therefore free up more reserves from the central bank, with estimates ranging from 400 billion yuan to as much as 700 billion yuan.