“China’s new leaders may further loosen interest-rate controls this year while allowing limited changes to one-child and household-registration policies that threaten to restrain growth, a survey of analysts shows.
Twelve of 16 analysts expect China to relax or remove the cap on deposit rates or the floor on lending rates, according to a Bloomberg News survey conducted ahead of Xi Jinping’s appointment as president tomorrow. A majority sees at least minor changes to the birth and registration policies.
Reduced restrictions on banks competing for deposits may boost returns to China’s savers, aiding efforts to switch the economy’s engine of growth to consumer spending from exports and investment. Xi and incoming Premier Li Keqiangmay be more cautious on changes to the one-child policy and the so-called hukou system, which denies education and social welfare benefits to millions of migrant workers in cities.
“Financial-market reforms should continue because there aren’t so many political or technical stumbling blocks,” saidLouis Kuijs, chief China economist at Royal Bank of Scotland Plc in Hong Kong and a former World Bank researcher. Hukou changes are “more complicated” and the one-child policy is so entrenched in Communist Party thinking that “it’s not so easy” to leave behind, he said.
China’s leaders, set to complete a once-a-decade handover of power at the meeting of the National People’s Congress in Beijing that ends March 17, are trying to support a rebound in growth from a 13-year-low without spurring excessive inflationor risks in the financial system.
