China's deposit reserve ratio refers to a certain percentage of reserves that commercial banks must keep in their deposit business. This ratio is determined and implemented by the People's Bank of China to maintain the stable operation of the financial system and control the money supply and inflation rate.

Deposit reserve is a part of deposits collected by commercial banks from depositors that must be kept in the central bank to ensure the bank's ability to pay and risk control. The adjustment of China's deposit reserve ratio has an important impact on commercial banks' loan and deposit interest rates, liquidity and credit risks.

The main role of China's deposit reserve ratio is to control the money supply and inflation rate. When the People's Bank of China decides to raise the reserve requirement ratio, commercial banks need to keep more reserves, which will reduce the amount of funds available to banks, limit their ability to make loans, reduce the money supply, and thus control inflation. On the contrary, when the People's Bank of China lowers the deposit reserve ratio, the proportion of reserves that commercial banks need to keep is reduced, releasing more funds, increasing the liquidity of loans and deposits, thereby stimulating economic growth.

In addition, China's deposit reserve ratio can also affect the cost of funds and loan interest rates of commercial banks. When the reserve requirement ratio is raised, the cost of funds for commercial banks will increase because they need to set aside more funds to meet the central bank's requirements, which will lead to higher bank lending rates and restrain economic growth. Conversely, when the deposit reserve ratio is lowered, the capital cost of commercial banks will be reduced, and they can attract more loan applicants by lowering loan interest rates.

In general, China's deposit reserve ratio is a tool used by the People's Bank of China to control the money supply, inflation rate and the cost of funds of commercial banks by adjusting the ratio. The adjustment of this ratio has an important impact on China's economy and financial market, and it is necessary to maintain the stability of the financial system and the sustainable development of the economy through scientific and reasonable decision-making.