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Published on : May 26, 2015

China has stressed on reforms for the financial sector and state firms and is expected to implement forceful measures. The state’s cabinet released an annual economic reform plan for this year, formulated by the National Development and Reform Commission. The plan has been termed as a brief version of the government work report to be presented by the premier in March 2016. Analysts have mentioned that this year’s plan highlights the state’s focus on introducing quicker reforms in the government owned enterprises as well as in the financial sector. 

According to the plan, the Chinese government will restructure centrally administered state-owned enterprises (SOEs), lower market threshold for private investors, and put efforts to reduce losses of state assets. China’s SOEs constitute around 60.4% of the overall market value of the country’s two stock exchanges. There have been reports that the government might merge 112 non-financial SOEs to 40. Industry analysts indicate that to consolidate the public sector, the government will restructure SOEs. 

Also, the reform plan is focusing on liberalizing financial sector by allowing financial institutions to price deposits and loans. Recently, the country’s central bank increased the upper limit of the floating band of deposit rates to 1.5 times. Zhou Xiaochuan, the governor of central bank has mentioned that the aim would be to open the capital market in 2015 and make the yuan convertible on the capital account. Analysts, however, point out that the state might compromise with the reform commitments, owing to the pressure to stabilize the slow growth of the economy.