HONG KONG—China’s central bank said it would reduce the amount of money banks are required to set aside as it moved to stimulate a slowing economy that has been weighed down by a slump in the property market.

It was the second such move this year, after an earlier one in July, in an effort to inject liquidity into the financial system. The measure signals Beijing’s growing concerns about the growth outlook of the world’s second-largest economy, which has been battered in recent months by multiple headwinds. Those include a...

HONG KONG—China’s central bank said it would reduce the amount of money banks are required to set aside as it moved to stimulate a slowing economy that has been weighed down by a slump in the property market.

It was the second such move this year, after an earlier one in July, in an effort to inject liquidity into the financial system. The measure signals Beijing’s growing concerns about the growth outlook of the world’s second-largest economy, which has been battered in recent months by multiple headwinds. Those include a sharp slowdown in its real-estate market amid a worsening debt crisis at some of its largest property developers and a nationwide power shortage. The potential threat of the Omicron variant of the coronavirus is adding to concerns.

On Monday, the People’s Bank of China said it would reduce the reserve requirement ratio by 0.5 percentage point starting Dec. 15, which would unleash about 1.2 trillion yuan, or $188.3 billion, into the financial system.

The PBOC said the cut won’t change what it called its prudent monetary-policy stance as part of the released liquidity will be used by banks to repay loans issued by the central bank to lenders. The bank said it would maintain a stable monetary policy and avoid flooding the economy with stimulus.

“China has entered an easing cycle,” said Larry Hu, chief China economist at Macquarie Group, adding that policy makers are expected to gradually move towards supporting growth in the next 6-12 months.

China recorded a steep economic slowdown in the third quarter as its pandemic bounceback fades—and now, Beijing is taking on longer-term issues including household debt and energy consumption. WSJ’s Anna Hirtenstein explains what investors are watching. Photo: Long Wei/Sipa Asia/Zuma Press The Wall Street Journal Interactive Edition

—Grace Zhu contributed to this article.

Write to Stella Yifan Xie at stella.xie@wsj.com