China to hasten financial reforms during 2014

~~HONG KONG – HSBC says China's financial reforms are likely to advance faster than many had expected in 2014. People’s Bank of China Governor, Zhou Xiaochuan, today for the first time affirmed that he expects deposit rates to be liberalised within one-to-two years. “China will also accelerate capital account opening-up and allow private commercial banks to be set up,” HSBC says. “We expect this determined push for financial reform to mean a widening of the floating band for deposit rates within 2014, and the introduction of a deposit insurance scheme in the coming months as well.”

Zhou and the heads of other four financial regulators held a press conference on financial reforms during the ongoing National People’s Congress sessions.

They said China would not set the pace and timetable for renminbi internationalisation, but would get its own homework done to create favourable conditions for wider usage of the renminbi in international markets.

The renminbi's capital account convertibility would be a key focus to facilitate internationalisation, which in turn should facilitate trade and direct investment (both foreign direct investment and offshore direct investment).

They said China wouldl actively promote bilateral trade and investment talks and make progress in opening up to foreign securities, fund management companies and futures companies based on a negative-list and pre-establishment national treatment approach.

Beijing would alsol strengthen co-operation with Hong Kong and Macau, and would support Chinese securities and fund management firms expanding abroad. www.hsbc.com (ATI).