BEIJING, March 5 -- China is to establish a deposit insurance system, according to a government work report available to media ahead of the annual parliamentary session on Wednesday.

"We will establish a deposit insurance system and improve the risk disposal mechanism of financial institutions," reads the report, which is to be delivered by Premier Li Keqiang at the opening of the annual session of the National People's Congress, the country's top legislature.

The deposit insurance system is considered a precondition for freeing deposit rates, the last and most important step of interest rate liberalization.