Shandong may show the way in reforming China's financial sector

Will Shandong show the way for China's economy?

A former chief securities regulator and now governor of Shandong province, Guo Shuqing, has launched a range of financial experiments that observers say could become an example for Premier Li Keqiang in overhauling the nation's financial sector.

Under the reform-minded financial veteran, who was once tipped to run the country's central bank, the Shandong government has vowed that it will boost the financial services industry share of local gross domestic product from 4 per cent at the end of last year to more than 5.5 per cent by 2017.

The local government has also outlined reform plans, including setting up private banks and financial leasing firms, carrying out trials for issuing local government debt, and developing assets securitisation.

"With Guo's rich experience and outstanding achievements at the central bank, the securities regulator and the commercial bank sector, Shandong is likely to become an important testing ground for Premier Li Keqiang to launch nationwide financial reforms," said Professor Guo Tianyong, director of the banking industry research centre at the Central University of Finance and Economics in Beijing.

Experiments in setting up private banks have been slow going in the few designated areas where they are allowed on the mainland, such as in Wenzhou , partly due to authorities' reservations.