The move aims to rationalize the growth of lending and investment, adjust and stabilize expectancy of inflation and maintain price stability.

Wang Guogang, professor in finance at the China Academy of Social Sciences, says the policy will cool down the heated economy.

"The measure is expected to curb the fast-growing loans increase to some extent," said Wang.

In addition, China will reduce the tax on interest income from 20 to 5 percent from the middle of August. Experts say this will attract more bank savings and is conductive to creating an economy characterised by rising investment and controlled inflation.

China has been experiencing booming economy during the first half of this year, with GDP growing by 11.5 percent and the consumer price index rising by 3.2 percent.