China cuts bank reserves to spur growth

BEIJING (Reuters) - China's central bank cut the amount of cash that banks must hold as reserves on Wednesday, the first industry-wide cut since May 2012, adding more liquidity to the world's second-biggest economy to help boost bank lending and combat a growth slowdown.

The People's Bank of China lowered the reserve requirement ratio (RRR) for all commercial banks by 50 basis points.

The reduction is effective Thursday, the central bank said in a statement on its website www.pbc.gov.cn.

That will take the RRR for big Chinese banks to 19.5 percent from 20 percent.

China cut the RRR for some banks last year, but this was the first broad-based change in the ratio since a 50 basis point cut in May 2012.

It came after the central bank announced a surprise cut in benchmark interest rates in November after a run of data showing the economy losing momentum.

China's economic growth slowed to 7.4 percent in 2014 - the weakest in 24 years - from 7.7 percent in 2013.

The economy faces formidable headwinds into 2015 as a property downturn persists while companies will continue to struggle to pay off debt and export demand may remain erratic.

(Reporting by Judy Hua, Kevin Yao and Koh Gui Qing; Editing by Jason Subler)