BEIJING, March 23 Chinese Vice Premier Zhang
Gaoli reaffirmed to a group of visiting senior foreign
executives and officials on Sunday that the country will
introduce market-based interest rates and a market-based
exchange rate for the yuan currency.
Zhang, speaking at the annual China Development Forum, said
China will "introduce a modern and competitive market system
with fair and open market rules". He provided no details.
China's central bank will focus on liberalising bank deposit
rates over the next two years, while loosening its grip on the
yuan currency to give greater influence to market forces, a vice
governor of the People's Bank of China said on Saturday.
Central bank chief Zhou Xiaochuan said earlier this month
deposit rates were likely to be liberalised in one to two years,
but government economists and policy advisers told Reuters they
believed the central bank was treading cautiously as economic
The central bank already allows banks to set their own
lending rates, but in practice they do not have full freedom
because of controls on deposit rates.
Zhang added that a key government priority will be fiscal
and tax reform, including development of "an open and
standardised budget system", which is crucial as China moves to
address issues associated with local government debt and local
China's local governments are responsible for 85 percent of
total government expenditure but collect less than 50 percent of
the country's total revenues, according to statistics compiled
by the Asian Development Bank.
Zhang also said the government was moving forward with
updating its value-added tax, excise and consumption tax.
Zhang said that a "fair and unified tax system" was needed.
A run of disappointing data showing China's economy lost
steam at the start of 2014, and the country's first domestic
bond default and subsequent media reports of trouble at other
companies, have added to pressure in its financial markets.
(Reporting by Matthew Miller; Writing by Ben Blanchard; Editing
by Michael Perry)