China's domestic financial reforms deepening

On China's domestic financial reforms, interest rate liberalisation is likely to proceed with the removal of the cap on all deposit rates. 

In parallel with this change, the PBoC is aiming to transform its monetary policy framework, as the one-year benchmark savings rate will no longer be used as a monetary policy tool after liberalisation, says Barclays. 

This can be done by setting up a new policy rate (or rate corridors consisting of an overnight liquidity window and refinancing rates) and using it to guide the interbank rate. 

"We expect other capital market reforms include a strengthening of financial regulation/oversight, a lowering of entry barriers for private banks and insurance sector reforms", added Barclays.