Expert on China cuts reserve ratio by 50 basis points

China's central bank has lowered the reserve requirement ratio by 50 basis points.

This represents the first across-the-board cut in the reserve requirement since May 2012.

On top of this, the central bank is additionally cutting the reserve requirement for banks that focus on lending to small and micro-sized enterprises, as well as the farming sector, by another 50-basis points.

China's major lenders currently need to hold 20 percent of their deposits in reserve.

The ratio for small and medium-sized banks is 16.5 percent.

The move comes just days after the purchasing managers' index, a main gauge of manufacturing activity, fell below 50 for the first time since October 2012.

For more on the move, the Beijing Hour's Zhao Yang earlier spoke with Liu Baocheng, Professor at the University Of International Business and Economics.

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