(Photo/Xiinhua)

The Chinese central bank has decided to cut the reserve requirement ratio (RRR) of financial institutions by half a percentage point, which will release long-term and systemic dividends into the market, and highlights the flexibility of Chinese monetary policy.

The People's Bank of China, the central bank, decided to cut the cash amount that financial institutions must hold as reserves as of Jan. 6, so as to support the development of the real economy and reduce the real cost of social financing.

This reduction will release 800 billion yuan (about $115 billion) of funds, which will play a counter-cyclical adjustment role.

This is the fourth cut since last year - the first three cuts were all based on grim internal and external situations.

This year’s fiscal policy has changed from last year's policy of strengthening and improving efficiency to one of improving quality and increasing efficiency, highlighting the fact that fiscal policy has begun to shift from quantitative to qualitative adjustment.

The macro economy is still expected to encounter many changes and even challenges in the internal and external markets in 2020. The New Year's first 800 billion yuan RRR cut is just the beginning, with the central bank making flexible and appropriate adjustments based on changing circumstances.