The People's Bank of China, or the central bank, announced Friday to raise the deposit reserve ratio of banks, excluding rural cooperative banks and credit cooperatives, by 0.5 percentage points, effective on August 15.

The hike will bring the reserves that most banks are required to keep in deposit with the central bank to 8.5 percent.

"The move aims to tighten up the banks' liquidity management, curb the excessive growth of money and credit, and maintain the good development momentum of the economy," said the central bank in a statement posted on its website.

China's economy surged a year-on-year 10.9 percent in the first half of 2006, the fastest in a decade. Total investment in roads, factory equipment and other fixed assets soared 29.8 percent, an increase of 4.4 percentage points from the same period of last year.