The market speculated about future changes in China's macroeconomic policies after the National Bureau of Statistics released this year's third-quarter economic growth rate, which slowed to 6.9 percent. In response, the country's central bank--the People's Bank of China (PBC)--sent a positive signal to the market. It announced reductions of interest rates and reserve requirement ratios for banks on October 23.

The central bank's move is supposed to ensure stable economic growth and stabilize the yuan's exchange rate.

In my opinion, the central bank's "dual cut" is a strong message of accelerated financial reform, rather than an effort to stabilize economic growth and market expectations. The central bank said in its official statement, "the deposit interest rate floating ceiling will be removed for commercial banks and rural cooperative financial institutions," indicating financial reform will be significantly accelerated, and market-oriented interest rate formations are finished.

China's economic growth is now slightly slower than before, and a continuous drop in the consumer price index has greatly alleviated inflationary pressure, which is conducive to reducing interest rate fluctuations. This is a good opportunity to further advance the market-oriented interest rate reform.

Recent analysis shows that China's economic growth is likely to slow further, increasing uncertainties in the country's financial reform and market development. However, rather than pause, China's financial reform has accelerated.

Premier Li Keqiang's remarks at a recent discussion with the financial industry reveal the government is changing from merely relaxing its monetary policy and increasing the money supply to pressing ahead with market-oriented financial reform.

The market-oriented financial reform will be carried out in the following aspects: As access to the financial market is lowered, it will be easier for private investors to set up banks. As the interest rates and exchange rates are reformed, pricing of the yuan in domestic and foreign markets will be more market-oriented. The construction of a multi-level capital market will be accelerated. Finally, the process of the yuan's free capital account convertibility will speed up, and the capital market will further open up to foreign investors.

Breakthroughs in the yuan's free capital account convertibility will be made in the China (Shanghai) Pilot Free Trade Zone. The State Council decided on October 21 to gradually improve the yuan's free capital account convertibility and study how it could allow qualified domestic individuals to make overseas investments.