The Chinese central bank unexpectedly announced on Sunday it would cut the commercial bank reserve requirement ratio (RRR) by 1 percentage point, aiming to maintain domestic liquidity at a "reasonably ample level".

Analysts believed the move, which will take effect on Oct 15, is meant to further fuel the country's real economy and fend off potential risks brought about by global trade uncertainties and downward pressure. The RRR cut will inject 1.2 trillion yuan ($174.7 billion) of commercial bank deposits from the central bank to the banking system, according to a statement on the People's Bank of China website.

Among that sum, 450 billion yuan will be used to pay back commercial bank borrowing through the Medium-term Lending Facility, which will expire on Oct 15.The move is intended to supplement liquidity in the financing system without monetary easing or massive economic stimulus, a spokesman from the central bank said.

The new policy will take effect before the release of the third quarter's major economic indicators on Oct 19, and some economists have predicted a slower GDP growth rate due to weak investment and tight regulation on the property sector.

Rising Sino-US trade frictions could add pressure on China's exports that may reduce its contribution to total GDP and may lead to greater risks, said Zhang Ming, a researcher with the Institute of World Economics and Politics at the Chinese Academy of Social Sciences.

The PBOC policy indicates the bank considered domestic economic targets prior to considerations of the external environment, although liquidity injection may further narrow the interest rate spread between China and the US. This is more likely if there is one more rate hike for the US Federal Reserve in 2018, according to Zhang.

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