Ratio cut to handle risks, trade barbs

China's proactive move of further cutting banks' cash reserve requirements and moving money into targeted sectors may relieve corporate credit pressure from debt reduction and cushion the impacts of a potential Sino-US trade war, said analysts.

They expect the central bank to continue liquidity management operations similar to Sunday's move once or twice more this year. Such moves are expected to offset internal growth pressures and external tariff headwinds.

Following a 1 percentage point cut of the reserve requirement ratio in April - an increase of 400 billion yuan ($61 billion) in liquidity for certain banks - the People's Bank of China, the central bank, announced another reserve ratio cut of half a percentage point for a wider range of banks to free up 700 billion yuan starting on July 5.