As China's economy heads for a slow down, the Chinese central bank has promised to boost the supply of liquidity in the financial system by turning to monetary easing tools. The announcement comes after China's weaker-than-expected Q1 GDP growth, with a central bank official saying the extent and timing will be 'appropriate'.

According to the official Xinhua news agency, an unnamed central bank official said China is looking to 'steadily' increase liquidity to steer its economy towards a soft landing.

Last week, economic data revealed that China economy grew by 8.1 percent in the first three months of this year, its slowest pace in nearly 3 years.

Related News: China Swings Back To Surprise Trade Surplus, Reversing A Sharp February Contraction

Acknowledging China's recent economic weakness, the bank official said China will boost liquidity through an increase in reverse purchase agreements, cuts in banks' reserve requirement ratios, and through the maturity of central bank bills. Almost 800 billion yuan ($12.7 billion) of liquidity is expected to be unlocked in the second quarter.

Xinhua, however, did not mention any outright cut in key interest rates.

The official commented:

We will take comprehensive and effective measures to make pre-emptive policy adjustment at appropriate time and pace so as to guide steady and appropriate growth in money and credit supply, to keep banking system liquidity at a reasonable level and to support stable and relatively fast economic growth.

Related News: China Lowers Bank Requirement, Over $60b Expected to Enter Financial System

Related News: China Eases Bank Reserve Requirement

In March, fresh lending increased to 1 trillion yuan ($160 billion), a more than 30 percent year-on-year increase, as the government shifted its focus to sustaining growth in the world's second largest economy.

In 2011, China's central bank loosened its monetary control, tools it had previously used to curb surging inflation and asset bubbles.

Since December, the People's Bank of China has already cut the bank reserve requirements twice, with policymakers stepping in to ensure credit is extended to small businesses and the agricultural sector, sectors that play a crucial role in the economy.

Related Story: Myths Debunked: Why China Will Have A Soft Landing: Stephen S. Roach

Related Story: China's 2012 Outlook: The Bad News about the Reserve Cut