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China signals need for economic reforms

BEIJING, May 24 (UPI) — The Chinese government is making what amounts to “radical” changes in its role in the country’s economy, an expert on the Chinese economy said.

“This is radical stuff, really. People have talked about this for a long time, but now we’re getting a clearly spoken reform agenda from the top,” Standard Chartered bank economist Stephen Green told The New York Times.

The Times reported Friday China’s new prime minister, Li Keqiang, in a speech this month pledged a reduction in the role of government. That was followed up Friday with policy reforms that show the government more willing to accept change by encouraging innovation and giving private businesses greater decision-making power, the Times said.

The reforms include a more liberal approach to how banks can set interest rates and more open policies to encourage business investment.

“All of society is ardently awaiting new breakthroughs in reform,” the government’s directive said.

In addition, on Friday the People’s Bank of China repeated its pledge to allow the market greater influence in determining the value of the renminbi, the Chinese currency.

China still has a long way to go to develop an economy that meets international standards regarding foreign investment or government interference, the Times said.

The motivation behind the recent changes is likely the need to sustain growth of China’s emerging middle class.

“There are quite a number of messages coming from these new leaders that they realize that if we continue to delay reforms, the economy could be in deep trouble,” said Huang Yiping, chief economist for Asia for Barclays bank.

Copyright 2013 United Press International, Inc. (UPI).

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