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China details plan to liberalize rates

Some of the changes to the Chinese financial system seek to boost domestic spending, including on construction.

Carlos Barria /Reuters

Some of the changes to the Chinese financial system seek to boost domestic spending, including on construction.

HONG KONG — The head of China’s central bank and other top financial regulators offered new details Tuesday on the country’s steps toward a more market-driven economy, including plans to liberalize interest rates as early as next year and to allow the establishment of the first privately owned official banks.

Although the announcements signaled incremental progress in modernizing the financial system and opening its still tightly controlled capital account, analysts welcomed the development.

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China’s leadership under President Xi Jinping laid out a program of bold, market-driven overhauls in November, but details on how and when these measures would be put into effect have been slow in coming.

“China’s financial reforms are likely to advance faster than many had expected in 2014,” HSBC analysts led by Qu Hongbin, co-head of Asian economic research, wrote Tuesday in a research note.

Zhou Xiaochuan, governor of the People’s Bank of China, said he expected the country to remove its ceiling on bank deposit rates — the last and most significant government restriction on interest rates — as early as next year.

China moved last summer to lift restrictions on lending rates, leaving banks free to charge what they wanted for loans.

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