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Reading Tea Leaves: Wen’s Comments on Financial Reform
If you’re looking for insight into the course of financial reform in China over the next few years, Premier Wen Jiabao’s work report isn’t the place to start. Many of the comments this year were boilerplate iterations of previous work reports (“We will continue to energetically develop financial markets and encourage financial innovation”). Those that weren’t have already had plenty of air time over the past year (“We will expand the use of the renminbi [yuan] in cross-border trade and investment”).
There were, however, a few surprises—and surprise omissions.

Among the surprises: Private equity got a shout out when Wen promised a greater role for direct financing. Beijing has been promising to wean the economy off bank lending and private equity has increasingly gained currency in Beijing as a useful tool toward that end. What that means for foreign firms such as Kohlberg Kravis & Roberts and Texas Pacific Group is hard to say, but getting props during China’s equivalent of the State of the Union address may give them some extra street cred.

Perhaps more interesting was how little attention some issues got. What’s shaping up as the one of the biggest reform challenges of the new five-year plan – interest-rate liberalization – barely got a mention.

In fact, the wording of Wen’s comment on the issue (“We will push forward the market-based reform of interest rates”) was nearly word-for-word identical to his 2009 speech. (Interest-rate reform didn’t make the cut in 2010. After a year of runaway lending by banks, much of which was of dubious quality, the thought of shifting rates to a more market-oriented footing wasn’t something anyone really had the stomach for.)
http://blogs.wsj.com/chinarealtime/2011/03/05/china-npc-wen-jiabao-report-financial-reform/