Spurred by fresh concerns, the People's Bank of China (PBOC) cut its key policy rate for the second time in three months on Tuesday.
The medium term loan facility (MLF) rate was lowered to 2.5% from 2.65% previously and the reverse repo rate from 1.9% to 1.8%.
The unexpected move is seen as a new effort by the authorities to support its economic recovery.
Analysts even see that the move also opens the door for a reduction in China's lending benchmark, the lending prime rate (LPR) next week.
The MLF rate serves as a guide to the LPR and most markets use it as a precursor to any changes in lending benchmarks.
In addition, banks in the country are also reportedly selling US dollars as an intervention to support the local currency, the yuan.
The PBOC's action was then followed by dismal Chinese economic data, with industrial production edging lower in August.
The unemployment rate also increased, prompting the authorities to no longer publish data for the youth unemployment rate.
The yuan edged lower in the Asian session at 7.296 against the greenback, falling to a more than 9-month low.
