The People's Bank of China has announced reducing the ratio of reserves banks must hold to help boost the world's second-largest economy.

The governor of the central bank, Pan Gongsheng, said on Wednesday the reserve requirement ratio (RRR) for banks would be cut by 50 basis points as of February 5.

Pan said that would inject about 1 trillion yuan into the economy.

China last cut its RRR in September, by 0.25 percentage points to around 7.4 percent.

In addition, the central bank will reduce re-lending and re-discount interest rates for the rural sector and small businesses by 0.25 percentage points from Thursday, as part of efforts to lower financing costs.

Pan also said more policies to offer support for the struggling property sector would soon be announced.

China's economy is recovering, he said, allowing ample room for policy manoeuvres.

"At present, our country’s financial risks are generally controllable, the overall operations of financial institutions are sound, and financial markets are operating smoothly,” he was quoted as saying. (Agencies)