Over recent weeks, calls for far-reaching economic reforms on the mainland have reached a near-deafening pitch. A string of respected academics have proposed measures to boost domestic consumer spending. Researchers at the central bank have set out a programme for scrapping Beijing's currency controls. And the World Bank, along with a central government think tank, has called for the break-up of state monopolies and banking-sector liberalisation. What's more, there are some signs these calls for reform have been heard at the highest levels of government. Last week, Premier Wen Jiabao said further reforms are needed to safeguard the economic gains of recent years. Then over the weekend Li Keqiang, the favourite to succeed Wen as premier in a year's time, declared: 'China has reached a critical period in changing its economic model.' Further liberalisation cannot wait. Li's comments reflect a broad consensus that Beijing needs to cut the nation's reliance on ever-increasing investment to generate economic growth, and switch instead to a development pattern based more on consumer demand. Economists fear that the current trajectory, in which investment contributed half of China's gross domestic product last year, and household spending only around a third, is no longer sustainable. They worry that capital is being misallocated on an epic scale and that returns on investment are falling as a result. Meanwhile, analysts fret that average incomes have failed to keep pace with economic growth, leading to a dangerous widening of the gulf between rich and poor. According to one academic economist, who is anxious not to be named, official household survey data now indicate that China's Gini coefficient - a widely followed measure of income inequality - now stands at 53, the same as Brazil's (see the first chart). Yet although key policymakers appear to recognise the importance and urgency of fresh liberalisation measures, Beijing is unlikely to push through the fundamental reforms economists are looking for. Zhang Pin, head of the National Development and Reform Commission, hinted as much yesterday when he told a conference: 'First of all, we need to maintain steady and relatively fast economic growth. Development is the key for resolving China's problems.' In other words, maintaining rapid growth remains Beijing's priority, whereas rebalancing the economy away from its dependence on investment and more towards consumer demand would necessarily involve a substantial deceleration in growth rates. That's not to say there will be no reform at all. A widening of the yuan's permitted trading band is possible. And Beijing is likely to cut the consumption tax in an attempt to boost household spending. There is also scope to ease the value-added tax burden on small companies, which would encourage the development of the service sector. But measures like these will amount to little more than tinkering. Meanwhile, Beijing is going to avoid making big reforms like interest-rate liberalisation. For years the government has kept interest rates artificially low, so that - adjusted for inflation - lending rates have averaged just 2.5 per cent, while on average deposit rates have been negative in real terms (see the second chart). The effect of this policy has been to keep capital artificially cheap, fuelling China's investment boom. Meanwhile, savers have been penalised, which has suppressed household consumption. The result is the distorted economy we see today. If the interest-rate regime were liberalised, banks would have to compete for funds, which would push up deposit rates and boost savers' incomes, encouraging more consumption. Naturally, lending rates would have to rise too, which would make it tougher for investment projects to generate a positive rate of return. The result would be slower investment and stronger consumer demand; exactly the rebalancing officials say they want. But for Beijing, full interest-rate liberalisation is a reform too far. State-backed industries and the powerful political factions they support, have grown too reliant on cheap capital to be able to survive and compete in a world where market forces determine their funding costs. So expect a lot of talk about reform, and a good deal of tinkering. But don't expect liberalisation where it really matters.