Podcast: The next critical step in China's financial reforms

Beijing has stepped up its commitment to financial reforms. (Photo/Xinhua)

People's Daily Online Business Podcast by Li Zhenyu
Previous: Keys to China's successful financial reform

The financial reform is considered one of the top priorities for China's economic reforms.

As a matter of fact, Beijing has already stepped up its commitment to financial reforms in the past two months with a slew of liberalization measures including further expanding the QFII quota, scraping the floor on lending rates for China's commercial banks and establishing a free trade zone in Shanghai, among others.

Timothy Adams, President and CEO of the Institute of International Finance (IIF), applauded Beijing's efforts in pushing forward the financial reforms and believes that the next critical step in China's financial reforms is finding the right pace. He recently shared with me the specifics.

Q: How do you see the pace of China's financial reforms? And what do think are the risks for China if the nation opens its financial markets too quickly?

A: The key is to find the right pace. If you do it too quickly and if it's not sequenced correctly, then you face the potential for greater volatility and uncertainty. But if you do it too slowly, then you don't make the transition to a new growth model faster enough to compensate for the slowdown in the old growth model.

So, I think finding the right balance and speed is important, but also sequencing the various reforms in the right way. And from I've learned, Chinese economic officials understand this timing and sequencing issue, and are working to address it.

• Podcast: How to solve China's shadow banking dilemma
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