China is cutting the amount of cash that banks must hold as reserves by 50 basis points.
It is the first reduction this year, as policymakers seek to support the economy.
The People's Bank of China Governor Pan Gongsheng told reporters on Wednesday that the adjustment in the reserve requirement ratio (RRR) would release about one trillion yuan in liquidity.
Beijing pledged to cut banks' reserve requirement ratio "in a timely manner" at a key meeting in late April.
The central bank also cut a key interest rate. Governor Pan announced that the lending rate to commercial banks would be reduced by 0.25 percent to 1.5 percent. (Agencies)