Interest Rate Liberalization and China’s Financial System Reforms

As noted at the Third Plenary Session of the 18th CPC Central Committee, the underlying issue of China’s economic system reform is how to strike a balance between the role of the government and that of the market, let the market play the decisive role in allocating resources, improve the mechanism whereby prices are mainly determined by the market, and let the government play its functions better. From a financial perspective, we should give play to the decisive role of market mechanism in allocating various financial resources and improve the financial system in which financial product prices are primarily determined by market mechanism. This policy statement lays bare the drawbacks of China’s financial system and financial markets and identifies the directions and priorities of financial reforms, development and innovation.