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China’s Household Bank Deposits Increased by 58 Billion Yuan Over Last Four Years

According to the latest data released by the People’s Bank of China, household bank deposits increased by a total of 58.24 Trillion Yuan (US$ 8 Trillion) during the period from early 2020 to January 2024. Of the increase, 82% was attributable to time deposits. The total increase in deposits over these four years is equivalent to the increase seen during the period from 2009 to 2019.

Commentators have attributed the influx in bank deposits to “the international and domestic situation.” Many affluent families decided to halt investments during the pandemic. Meanwhile, ordinary families, facing reduced income, chose to conserve their resources and earn interest by saving money in banks.

With the increase in deposits, Chinese banks have been under pressure to issue loans and generate returns. Since the start of the COVID-19 pandemic, China has seen reduced demand for bank loans due to the decrease in China’s overseas orders and the rapid shrinkage of the country’s investment in infrastructure / housing construction. Property values have been falling, the Chinese stock market is declining, and private capital investment have seen significant contraction. Apart from export-oriented companies with existing orders, other businesses learned the lesson that they should not make investments, putting banks in a difficult position.

Source: Radio Free Asia, February 26, 2024