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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 189

China Business Intelligence No. 189

Samsung Economic Research Institute Beijing Office

Feb. 15, 2011

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The deregulation of interest rates means that the government and monetary authorities ease regulations on interest rates and set interest rates in line with the financial market's capital supply and demand. The deregulation of interest rates changes the authorities' direct intervention into an indirect intervention. In the long term, the deregulation of interest rates will enable the realization of a reasonable rearrangement of capital, minimizing distortions caused by administrative intervention. Also, it will lay the foundation for the reform of the yuan exchange rate system and contribute to improving the current banking system, which is excessively dependent on differences in interest rates.

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