(Photo : RMB)

It was in the middle of the 1980's when China maintains a tight guard on the United States, which was held out of the bank deposit rates when the economic depressions struck.

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Joe Zhang, author of the 'Inside China's Shadow Banking: The Next Subprime Crisis,' stated that, the discussion in the government was quite serious. It was about liberalizing all interest rates within four to five years."

He wrote a thesis back in 1986 entitled the "The Path to Interest Rate Liberalization," at the People's Bank of China graduate school was said to "not stand out in any way, because that was an accepted topic."

After three decades, China still faces the challenges of the interest rates matters with the leadership of the new prime minister, Li Keqiang. The prime minister now takes action in focusing more on liberalizing the interest rates so it now becomes a priority over other issues.

When this takes place successfully, it will become a significant growth in China's economic changes. Last Friday, the central bank lowered the lending rates so banks can now issue loans at the cheapest rates they can afford. This is said to be a fair action of development to face more challenges in the future.

Economic experts and analyst share remarks saying that flooring the lending rates is an indication that Beijing will progress forward with guaranteed overhauls. However, the effect in the economy may be of little significance since 90 percent of loans are created above the benchmark rate. The mortgage loans are currently regulated.

Wang Tao, and economist in UBS Hongkong said, "Removing lending rate restrictions are an important symbolic move, which signals the government's intention to move forward with interest rate liberalization. The next and more important step is, of course, the ceiling on deposit rates. The central bank considers the removal of the deposit ceiling as the most critical yet most risky move in interest rate liberalization."