China's interest rate system has been trying to shift from centralized state management to gradual marketization, slowly but persistently. As an important price signal of market economy, market interest rate not only affects the economic operation of the country at the macro level, but also directly affects the economic activities of enterprises and individuals at the micro level. In October 2013, China introduced the preferential interest rate(Loan Prime Rate, “LPR") system for loans, which aims to set banks' interest rate as the real market benchmark interest rate and to promote the market operation mechanism of the interest rate. However, as the existing lending banchmark interest rate that had previously been running in parallel continues to exceed the LPR rate level, the utilization of LPR interest rates in the bank window remains only at a very limited level. With the increase of economic uncertainty, the existing lending banchmark interest rate has shown many limitations in actively responding to the market interest rate linkage capital demand of enterprises and households under the global tendency of low interest rate. Chinese government in such a realistic understanding that the existing lending banchmark interest rate does not properly reflect real market interest rate, in order to ensure the effectiveness of monetary policy, launched a new loan preferential interest rate the new LPR system on 25th August 2019. According to some experts, through the new LPR, the bank's lending policy rate has actually replaced the existing benchmark lending rate, so it has achieved a meaningful market-oriented process. However, the determination mechanism of current lending rate in China, used as interest rate policy tools by central bank, have a direct effect on the new LPR, the new form of government dominance is still in operation. Open market operations such as reverse repurchase rate have an effect on the level of MLF(Medium-term Lending Facility) interest rates which also operated by central bank, and MLF interest rates once again affect LPR interest rates, accompanied by a combination of window guidance of the authorities, so there still has obvious tendency of the ‘government-led features'. As a result, measures such as the expansion of the new LPR notification banks(previous 10 to currently 18 banks) to calculate the average interest rate for the new LPR show the authorities' will to strengthen the market interest rate system. And yet, from the recent trend of a uniformed downward trend in interest rates, we can see that the determination mechanism of current interest rate is still behind the above-mentioned central bank tools reflected by the government policy intention.