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Lou Feipeng, senior economist at Postal Savings Bank of China

The first reserve ratio cut in 2020 aims to reduce social financing costs by providing capital for the early issuance of local government bonds that will strengthen infrastructure construction. As the cut was made at the start of the year, commercial banks are able to lend more to companies and receive profits earlier.

"The reserve ratio cut is a countercyclical measure to stabilize growth and a reflection of the flexibility of monetary policy," Lou said.

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