Aiming to further support the development of the real economy, optimize the liquidity structure and lower financing costs, the People’s Bank of China (PBC) has decided to lower the required reserve ratio for financial institutions by 1 percentage point, 0.5 percentage point of which will be cut on January 15, 2019 and a further 0.5 percentage point on January 25, 2019. In addition, the outstanding MLFs due to mature in the first quarter of this year will not be renewed. Such arrangements are intended to smooth out the liquidity fluctuations that might emerge as a result of cash injections in the run-up to the Spring Festival this year, and help financial institutions further strengthen support for small and micro businesses and private enterprises.

At present, the Chinese economy has continued its sound growth and the performance has remained within a reasonable range. The PBC will continue the prudent monetary policy with appropriate stance, focus on targeted adjustment instead of massive supply of liquidity, keep the liquidity reasonably adequate, maintain the reasonable growth of money, credit and aggregate financing to the real economy, stabilize macro leverage ratio, and strike a balance both internally and externally, so as to create a suitable monetary and financial environment for high-quality economic development and the supply-side structural reforms.

From a release: http://www.pbc.gov.cn/english/130721/3739880/index.html