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China Details Plans to Liberalize Interest Rates and Encourage Private Banks

HONG KONG — The head of China’s central bank and other top financial regulators offered new details on the country’s steps toward a more market-driven economy, including plans to liberalize interest rates as early as next year and to allow the establishment of the first privately owned official banks.

Although the announcements signaled incremental progress in modernizing the country’s financial system and opening its still tightly controlled capital account, analysts welcomed the development.

China’s leadership under President Xi Jinping laid out a program of bold, market-driven overhauls in November, but details on how and when these measures would be put into effect have been slow in coming.

“China’s financial reforms are likely to advance faster than many had expected in 2014,” HSBC analysts led by Qu Hongbin, co-head of Asian economic research, wrote in a research note.

Zhou Xiaochuan, governor of the People’s Bank of China, said he expected the country to remove its ceiling on bank deposit rates — the last and most significant government restriction on interest rates — as early as next year.

“The final liberalization of deposit rates is the last step of interest-rate marketization,” Mr. Zhou told reporters on the sidelines of an annual meeting of China’s rubber-stamp legislature, the National People’s Congress. “Since many other interest rates have been liberalized, deposit rate liberalization is definitely on our agenda. I personally believe it’s very likely to be achieved in one or two years.”