China to step up monetary easing to support economy: cabinet

FILE PHOTO: People wearing protective face masks walk past office buildings in Lujiazui financial district in Pudong, in Shanghai, following the coronavirus disease (COVID-19) outbreak, China June 4, 2020. REUTERS/Aly Song

BEIJING (Reuters) - China will step up monetary easing and keep liquidity “reasonably ample”, the state cabinet said in a meeting chaired by premier Li Keqiang on Wednesday, as it looks to support the economy and help small and medium-sized firms.

The cabinet indicated that the government will keep liquidity ample by cutting the required reserved ratio (RRR) - the amount of cash banks are required to hold - and re-lending, while guiding market interest rates lower, the state broadcaster CCTV reported.

The government will ensure that China’s issuance of new yuan-denominated loans and total social financing in 2020 exceed last year’s total, the report added.

China will also push financial institutions to sacrifice 1.5 trillion yuan ($212 billion) in profit this year to support companies of all kinds by lowering lending rates and fees, and deferring loan payments, according to the report.

Reporting by Lusha Zhang, Colin Qian,Kevin Yao; Writing by Yawen Chen; Editing by Kevin Liffey