How prepared are Chinese leaders for reform?

Speculation about China’s much-needed reforms is intensifying as the country’s 18th Communist Party Congress kicks off, but the new leaders’ reformist credentials are still far from clear.

Optimise is the order of the day at HSBC, which issued a 60-page report featuring very encouraging predictions about how China’s new leaders are ready to revolutionise the country’s financial system.

The British bank claims that conditions are ripe for the renminbi to become fully convertible in five years and that the bond market will double in size under the new leadership’s transition to market-based interest rates.

These changes would not only make capital allocation more...