Seek a global solution

China's decision to cut interest rates for the second time in less than a month may be interpreted as an encouraging sign that the world's fourth largest economy is participating in global efforts to tackle a worsening global financial crisis.

Soon after six central banks in North America and Europe cut interest rates, the People's Bank of China reduced not only interest rates for loans and deposits but also the proportion of deposits that banks must hold in reserve.

The move shows that the Chinese authorities are fully aware of the global situation. By responding swiftly to the coordinated easing by global central banks, China has given a considerable boost to the global confidence to save the world economy from sliding into a deep recession. Given its importance to the global economy, an accommodating Chinese monetary policy will largely raise the chance for a global solution to effectively prevent a further deepening of the financial crisis.