Average interest rates faced by companies have edged down since April, as a more generous liquidity policy from the PBOC has lowered market rates, even as benchmark lending rates remained unchanged, Oxford Economics said in a report on Thursday.
However, the decline also threatens to damage the Chinese economy by encouraging capital to flow out of the world's second-largest economy, increasing borrowing costs at a time when communist leaders are trying to shore up cooling growth.
Shares in Asia staggered on Monday as China's markets stumbled despite its central bank moving to pump more liquidity into the broader economy, as worries grow of a sharp knock to growth from an escalating trade dispute with the United States.
But citing trade policy tensions, the International Monetary Fund cut its global economic growth forecasts for 2018 and 2019 on Tuesday, and predicted that China could face particularly severe consequences in the event of an all-out US-China trade war.
A anxious China has injected $110 billion into its economy in the wake of the trade war with the United States in order to shore up business confidence.
Hong Kong's Hang Seng index was down 0.9 percent.
Telecoms equipment maker ZTE led tech shares downward on Monday, falling 8.14% to 16.81 yuan after a Bloomberg News report last week said China had inserted special microchips into computer goods exported to the U.S. to steal technology secrets. "Cutting RRR at a time of relatively ample liquidity in the banking system is not likely to have much effect", wrote Zhao Jian, a finance professor of the University of Jinan.
The offshore yuan was also weaker at 6.9050 per dollar. Yields of China's 10-year central government bonds have been trending lower this year, standing at 3.633 per cent on Monday.
Beijing has intensified cash flow across the financial system this year since policymakers are concerned on soothing capital outflow fears and strive for soothing pommeled markets amid the growing anxieties regarding frenzied trade war with the US could have a damaging effect on the broader economy.
Investors are also keeping an eye on Brazil after right-wing Congressman Jair Bolsonaro won almost half the votes in Brazil's first-round presidential election on Sunday, marking a major shift to the right in Latin America's largest nation fuelled by voters' anger at corruption.
However, the bank's move could not prevent stocks from falling further.
USA crude was down 0.7 percent at $73.80 a barrel.
On Monday, the yuan sank to a 22-month low of 6.93 to the dollar, making one yuan worth about 14.4 cents. That would represent a decline of another 1 percent from Monday's level.
Spot gold fell 0.5 percent to $1,196.51 per ounce.