|(NPC) Beijing outlines further interest rates reforms, opens telcos to private investment
China promised more reforms to promote sustainable growth by opening state-dominated industries to private investment, making its banks more market-oriented and encouraging consumer spending.
In his first annual policy speech, Premier Li Keqiang (Pictured) told the Natinal People’s Congress in Beijing that China will encourage competition, ease exchange rate controls and improve access to credit for productive businesses, AP reports.
Li's pledges were in line with Communist Party plans issued in November that call for promoting market forces and domestic consumption to replace a model based on exports and investment that delivered three decades of explosive growth but has run out of steam.
“We need to make sure the market plays a decisive role,'' said Li. He promised to “break mental shackles and vested interests'' _ a reference to possible resistance from state companies that might lose subsidies and monopolies.
Despite pledges of reform, the ruling party made clear the limits to possible change in its November plan by declaring that state ownership will remain the core of the economy.
Li announced an official growth target of 7.5 percent for this year. That was unchanged from last year's target.
Li promised an array of changes in banking and finance that reform advocates say are essential to making the economy more efficient and productive.
Banks will be given more control over lending and interest rates, the premier said. That would allow profitable companies to compete for credit by paying higher rates, possibly channeling more money to entrepreneurs who generate most of China's new jobs and wealth but are mostly unable to get loans from the state-run system. It also might boost rates paid on savings.
The premier also threw the government's support behind the growth of popular new internet-based banking services, promising to promote their “healthy development.''
Services such as one launched by e-commerce giant Alibaba Group have drawn billions of dollars in deposits from small savers by paying higher rates than state banks
Li promised to open state-controlled industries such as banking, oil, power generation, railways and telecommunications to private investment. He pledged to “level the playing field'' for Chinese and foreign companies to promote competition.
Beijing will make domestic demand “the main engine driving growth,'' Li said. He promised to promote consumer spending by raising incomes and encourage growth of service industries such as education, tourism and care for the elderly, the premier said.
“We will enhance people's ability to consume,'' said Li.