China's Fixed Deposit Rates Hit Record Lows as Household Savings Drop Over 2 Trillion Yuan in Two Months

(Central News Agency reporter Liao Wen-chi, Shanghai, June 16) Data from China's central bank shows that household deposits declined by a combined 2.05 trillion yuan (approximately NT$9.5 trillion) in April and May 2026, marking the largest two-month consecutive drop in nearly a decade. Chinese media analysis attributes this wave of 'deposit migration' primarily to the maturity of large volumes of high-interest time deposits and renewal interest rates falling to historic lows, with funds shifting toward wealth management, funds, and insurance products.

According to a report by 21st Century Business Herald, data from the People's Bank of China indicates that household deposits decreased by a total of 2.05 trillion yuan in April and May 2026, the largest 'two-month consecutive decline' in the past decade. During the same period, deposits at non-bank financial institutions—represented by wealth management products, funds, and insurance—surged by 3.61 trillion yuan.

The report cites Zeng Gang, deputy director of the National Institute of Financial Development, who notes that this round of 'deposit migration' is the result of two converging forces: the maturity of a large volume of high-interest deposits and renewal rates dropping to historic lows.

Between 2023 and 2024, households locked in large amounts of 3-year and 5-year high-interest term deposits, which are now maturing en masse in the second quarter of 2026. Multiple institutions estimate that the volume of household term deposits maturing in 2026 will reach between 50 trillion and 75 trillion yuan, a peak in recent years.

In terms of interest rate changes, in 2023, the posted interest rates for 3-year term deposits at major state-owned banks in China ranged between 2.6% and 2.8%. By early 2026, these rates had dropped to 1.25%.

Meanwhile, the yield advantage of alternative products is becoming more apparent. Yields on bank current and short-term deposits continue to decline, widening the yield gap with asset management products such as wealth management funds, thereby increasing their relative attractiveness.

Citing data from Huayuan Securities, the report notes that in April 2026, the average annualized yield for fixed-income wealth management products and pure fixed-income products offered by wealth management companies reached 3.42% and 2.71%, respectively. In contrast, the posted interest rate for 1-year term deposits at major state-owned banks has fallen below 1%.

Other factors contributing to the decline in deposits include a rebound in the stock market and some households withdrawing savings to repay mortgages, actively reducing household leverage. Seasonal factors also play a role, as wealth management product scales typically exhibit a pattern of 'declining at quarter-end and rising at quarter-start'.

The last time household deposits declined for two consecutive months was in April and May 2015, when they fell by 1.05 trillion yuan and 441.3 billion yuan, respectively. In June of that year, the Shanghai Composite Index surpassed 5,100 points, reflecting heightened investor enthusiasm and a singular flow of funds into equities.

The situation in 2026 is markedly different. This round of fund migration is characterized by 'diversification' and 'de-risking', with funds primarily flowing into fixed-income products such as bank wealth management, money market funds, bond funds, and savings-type insurance.

Data confirms that non-bank financial institution deposits surged by 3.61 trillion yuan in April and May 2026, with substantial funds flowing into asset management products offered by non-bank institutions. According to Huayuan Securities, bank wealth management assets increased by 2.6 trillion yuan in April 2026 alone, reaching 34.5 trillion yuan—above the average for the same period over the past five years. CICC estimates that in the first quarter of 2026, approximately 451 billion yuan of household funds flowed into stock margin accounts, far below the 1.5 trillion yuan that flowed into life insurance, indicating that stable, low-risk assets remain the primary destination for funds.

This shift of funds from household deposits to wealth management, funds, and insurance products at non-bank financial institutions is testing the liability management capabilities of commercial banks. Compared to the relatively stable household term deposits, these funds have shorter durations and are more sensitive to changes in yields and market sentiment, potentially increasing liquidity management pressure on banks. (Editor: Zhu Jianling) 1150616