China to carry out faster reform

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(Shanghai Daily) 16:33, November 27, 2013

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BEIJING, Nov. 27 -- China will accelerate to market-based deposit rates and capital account convertibility as the government hopes these reforms will act as an engine to carry the economy forward, central bank Governor Zhou Xiaochuan said yesterday.

Speaking at a forum, Zhou said China will not ease monetary policies but will speed up reforms in liberalizing interest rates and realizing capital account convertibility.

“The Chinese government is emphasizing reforms to boost the vitality of the market and maintain stable economic growth,” Zhou said.

The monetary authorities have quickened building a pricing and quoting system that will help liberalize interest rates, especially deposit rates, he said. Thorough interest rate liberalization will be realized in “mid-term,” Zhou said, without giving a time frame.

He also reiterated that capital account convertibility will be accelerated “based on the results of these reforms” to cut companies’ financial transaction costs for trade and investment.

Other reforms include setting up a negative-list system as well as raising the cross-border investment quotas which will be scrapped “when the time is ripe.”

China will also allow private firms to form small and medium financial institutions.

Hu Xiaolian, deputy governor of the central bank, said earlier that deposit rates will be relaxed eventually because the market will play a decisive role.

Zhou wrote in a booklet this month that the central bank will “basically” refrain from setting a daily guidance on the yuan exchange rate and scrap a quota system which limits foreign investment in the domestic capital market.

（Editor：LiXiang、Zhang Qian）