As a rookie at the central bank in Beijing during the early days of China’s economic transformation, Joe Zhang considered it a foregone conclusion that the government would soon loosen its grip on interest rates. It was the mid-1980s, and Chinese policy makers had been keeping a close watch on the United States, which was phasing out the mandatory caps on bank deposit rates that had been in place since the Depression. In China, Mr. Zhang said, “the discussion in the government was quite serious. It was about liberalizing all interest rates within four to five years.”
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