Worries over PBOC's ambitious bid to liberalise deposit rates

The mainland's reform-minded central bankers may have been hasty earlier this year when they set a two-year timeline for liberalising deposit rates.

Economic slowdown on the mainland will make hitting that target - the final major step in financial reform - increasingly difficult as Beijing looks to maintain growth with investment while keeping the cost of lending low, Fitch Ratings said in a report yesterday.

"The reform impetus remains intact; but the longer the economy slows, the greater the risk that government will delay or water down its immediate objective of returning the economy to a more sustainable growth path," the Fitch report said, noting that the mid-2016 target for deposit liberalisation was too short.

People's Bank of China governor Zhou Xiaochuan in March said that liberalising deposits could take up to two years, a short timeframe cheered by some analysts but questioned by others at the time. Since then, Zhou, 66, has reportedly been due for retirement.

The mainland economy grew by 7.3 per cent year on year in the third quarter and many economists have downgraded their outlooks for full-year growth.

In response to slowing growth, the central government has sought to boost investment with the hopes of delivering 7.5 per cent growth for 2014, a target set at the beginning of the year.

State-run People's Daily said on Wednesday that local governments and ministries were stepping up investments into construction projects, a signal that policymakers are increasingly wary of a slowdown.