The People’s Bank of China’s move to cut the amount of cash banks must hold as reserves is releasing around 1tn yuan ($154.19bn) in long-term liquidity to support its post-Covid economic recovery.
The central bank says its prudent monetary policy remains unchanged. 
Even with the support for small and mid-sized businesses, there’s no sign of a broad reversal in the disciplined stimulus approach authorities have taken since the crisis began.
But China’s V-shaped economic rebound from the pandemic is slowing, sending a warning to the rest of world about how durable their own recoveries will prove to be, according to a Bloomberg report.
While the PBoC said the move isn’t a renewed stimulus push, the breadth of the 50 basis-point reserve requirement ratio (RRR) cut comes as a surprise.
Data on Thursday is expected to show growth eased in the second quarter to 8% from the record gain of 18.3% in Q1, according to a Bloomberg poll. Key readings of retail sales, industrial production and fixed asset investment are all set to moderate, too.
In a wider sense, the economy was expected to descend from the heights hit during its initial rebound and as last year’s low base effect washes out. But economists say the softening has come sooner than expected, and could now ripple across the world.
“There is no doubt that the impact of a slowing China on the global economy will be bigger than it was five years ago,” said Rob Subbaraman, head of global markets research at Nomura Holdings. “China’s ‘first-in, first-out’ status from Covid-19 could also influence market expectations that if China’s economy is cooling now, others will soon follow.”
The Group of 20 finance ministers, in meeting in Venice on Saturday, signalled alarm over threats that could derail a fragile global recovery. New variants of the coronavirus and an uneven pace of vaccination could undermine a brightening outlook for the world economy. 
China’s state media also cited several analysts, saying domestic growth will slow in the second half because of an uncertain global recovery.
For sure, there is not a sector of the global economy untouched by Covid-19.
As policymakers, analysts and investors take into account the degree of uncertainty now in play to factor in the longer-term impact of the pandemic, China’s economic outlook is of global significance.
China’s population is ageing and there are fewer working-age adults to drive output. 
The economy is loaded up on debt, too. Slower growth may challenge China’s ability to stem the buildup of its government, corporate and household debt, which according to Bloomberg Economics, is on track to add up to more than 300% of GDP 
by 2022.
For sure, the country is a key driver of global growth.
China’s $14.7tn economy, second in size only to the US with a $20.9tn heft, accounts for almost a third of global growth each year. That makes it a vital driver of job creation and improved living standards across the world.
And the PBoC’s swift move to lower banks’ RRR is one way of making sure the recovery stabilises from here, rather than stumbles.