How Would 8-Trillion-Yuan Deposits Get out of 'Hibernation'

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Last updated at: (Beijing Time) Friday, July 05, 2002

How Would 8-Trillion-Yuan Deposits Get out of 'Hibernation'

A survey conducted by China's central bank shows that the majority of residents would still love to put their money into banks. It seems an urgent thing for the government to encourage investment, stimulate consumption, and hopefully, let residents unzip their "money pocket".

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Statistics from the central People's Bank of China indicate that residents' savings deposits have exceeded 8 trillion yuan till this day.

In the meanwhile, a survey conducted by the bank shows that residents would love still to put their money into banks, only a small number of people choose stock or T-bond, of which, 65% of respondents of the survey select savings deposit, some 10% choose T-bond and 10% buy stocks. This shows that only 20% of them would love to turn the savings into investment, the 8 trillion yuan of savings deposits are still in "hibernation" state.

Three factors block people's ideas for investment

Over a long period of time, stocks, T-bonds, funds, insurances have been the way for turning the 8 trillion yuan into investment, but why only 20% of people choose investment, following reasons may offer the answer:

First, T-bond interest rate is relatively low, people's lack of knowledge on book-entry T-bond is the main reason why they are not interested in T-bond.

Second, a large part of the savings will be used for more practical purposes, so savers hardly take the money out for investment or consumption.

Third, Chinese securities and insurance markets are still in infancy, plus stock fluctuation, people lose confidence in this field.

How to unzip people's "money bag"?

It is certainly not a good thing for a country, bank or enterprise if deposits could not be turned into investment and consumption.

For a country, both construction and maintaining stable economic growth need a huge sum of capital, if the 8 trillion yuan could not be shifted into investment or consumption, it would not only fail to meet domestic demands, but also could not stimulate economic growth.

For banks, commercial banks' profits are mainly obtained from the balance between the deposit's interest rate and that of loans, if a large amount of capital could not be lent out, banks could not make profits.

And for enterprises, they would land in economic plague if they could not get loans from banks. Therefore, guiding savings into investment field is an urgent task.

Not long ago, the central bank governor Dai Xianglong specifically pointed out the country needs to develop capital market to stimulate domestic demands.

Dai said that firstly, the securities market should be regulated, and the government should support individuals to buy stocks.

Meanwhile, it should also encourage enterprises to issue treasure bonds, secondly, related regulations need to be worked out to set up various funds, thirdly, stock-funded enterprises are encouraged to raise funds and fourthly, individual and private businesses should also get further development to let more farmers get involved in business.

By PD Online Staff Li Yan

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