China will use policy tools, including reserve requirement ratio (RRR) cuts – the amount of cash banks must hold in reserves – in a timely way, to support the real economy, especially those industries and small companies badly hit by the pandemic, according to a regular cabinet meeting held on Wednesday.

The State Council meeting decided to take measures to boost consumption, including the consumption of consumer durables such as cars and home appliances. Therefore, local governments are forbidden to launch new limits on vehicle purchase.

China will also step up export tax rebates to stabilize foreign trade, said the meeting.

"The market participants' expectations for the [Chinese] economy have weakened," said Yao Jingyuan, a researcher at the Counsellors' Office of the State Council.

Yao said the government should reduce taxes and fees for small- and medium-sized enterprises to reduce their financing costs and stimulate the vitality of market players to face economic challenges.

(CGTN's Song Yaotian contributed to the report.)