China to free deposit rates in coming one or two years

China is very likely to ease its grip on banks' deposit rate in the coming one or two years, central bank governor Zhou Xiaochuan said on Tuesday.

Zhou made the remarks at a press conference on the sidelines of the National People's Congress, China's top legislature.

His comments came after an earlier government report said China is to establish a deposit insurance system this year, the last and most important step of interest rate liberalization.

China has taken incremental steps toward interest rate liberalization, including a central bank decision in July to scrap the floor limit for bank lending rates, and a guideline in December for piloting negotiable deposit certificates on the interbank market.