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     BEIJING (MNI) - China's central bank further cut the amount of reserves
lenders must set aside on Friday, unlocking CNY900 billion in long-term
liquidity as the world's second-largest economy seeks to encourage lending and
reignite growth.
     The People's Bank of China will implement a 0.5 percentage point
across-the-board cut in banks' reserve requirement ratios on Sept. 16, it said
on its website. In line with its focus on helping small businesses, city
commercial banks will receive another 1 pp cut, carried out in two
0.5-percentage point installments on Oct. 15 and Nov. 15, the central bank said.
     The cut was anticipated in MNI's Sept. 4 story (MNI Exclusive: China Should
Cut Rates, Advisors Say). Expectations for such a measure grew after signals in
speeches this week by top officials including Vice Premier Liu He and Ni Jizhe,
vice chairman of the National Development and Reform Commission.
     The across-the-board cut will inject CNY800 billion into the economy, while
the 1 pp cut to smaller lenders will free up another CNY100 billion, the central
bank said. It will also reduce banks' costs by CNY15 billion each year, it said.
     Policymakers aim to match the growth rate of the M2 measure of broad money
and of aggregate financing to the economy with that of nominal GDP, and to
increase countercyclical measures, They are not seeking a "credit flood," the
central bank said, adding that its prudent monetary policy stance has not
changed.
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MI$$$$,MK$$$$,MT$$$$]

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