In the past week, the People's Bank of China has been trying to inject more two-way volatility into yuan trading by guiding the currency lower, an effort Chinese officials and analysts say is aimed at paving the way for widening the yuan's trading band sometime this year. In mainland China, the PBOC sets a benchmark rate against which the yuan can trade; currently the bank allows investors to push its value 1% in either direction from that set rate.

Many analysts and economists expect the central bank to expand that range by allowing the currency to move up or down by 2% daily, a move some say could happen as soon as next month, when China's rubber-stamp legislature meets in Beijing. And some see the yuan-band widening as the low-hanging fruit as far as reform efforts are concerned.

'The PBOC has said it would speed up financial reforms, but things like liberalizing interest rates and exchange rates carry a lot of risks,' said Zhang Ming, a senior economist at the Chinese Academy of Social Science, a government think-tank. 'By comparison, it's a lot easier to do something like widening the yuan's trading band because that would still leave the PBOC in control of the currency.'

More difficult tasks the central bank faces include giving the market a bigger role in setting the exchange rate and in allocating resources and opening the door wider to foreign capital flows -- or money moving in and out of the country.

PBOC officials, led by Gov. Zhou Xiaochuan, are eager to press ahead on those reforms to help reshape the country's economic model so it's more reliant on domestic consumption and less on exports and investments. But some officials and scholars fear that an aggressive financial reform agenda that leaves untouched other pillars of the economy, such as state-owned enterprises, could backfire.

China is awash in credit, with domestic debt rising so rapidly over the past five years that analysts say the economy is beginning to look a lot like Japan, Thailand and Korea did before financial bubbles there burst and produced deep recessions. If interest rates are liberalized too fast, they say, China would risk more credit going to build developments with few occupants -- ' ghost cities,' as they are called, thereby making the country more vulnerable to financial problems.

In addition to yuan-band widening, also high on the PBOC's agenda is setting up a bank-deposit insurance system. The country has never had such insurance, although there has been an implicit guarantee that the government would step in to protect depositors if a bank fails. Introduction of such a system has been stalled for at least 10 years because of opposition from large state-owned banks, officials at those banks say.

But now, China's leaders have put a premium on increasing lending to smaller, innovative firms -- also a priority of the PBOC's -- and want to increase the number of smaller, privately owned banks to make these higher-risk loans. Deposit insurance could help such banks build credibility with consumers worried about the safety of their money.

It's also is widely seen as a first step toward letting banks compete on deposit rates, rather than the current practice in which the government sets it. Higher rates would put more money in Chinese consumers' pockets and give smaller institutions a tool to lure depositors away from larger banks.

'All eyes will be on whether the authorities will walk the walk of reform after the talk,' said Qu Hongbin, co-head of Asian economic research at HSBC Holdings PLC.