Monetary reforms must be given top priority

Money | Luo Jiexin and Xue He

The announcement by the People's Bank of China, the central bank, on Nov 21 that benchmark interest rates were being cut for the first time since July 2012 surprised the market. That was mostly because top authorities had previously signaled that they were reluctant to resort to all-round rate adjustments to shore up the economy, which has been showing more signs of slowing down in the past two months.

The rate cuts showed that the downside pressure of the economy is much heavier than previously thought, that the government has slightly changed its policy orientation, and that rate liberalization must be sped up.