China’s $7 Trillion Shifts to Profitable Investments
Chinese households are seeking higher-yielding investments as approximately $7 trillion in time deposits mature this year, a transition that may offer further impetus for the nation’s financial markets. The substantial accumulation of savings stems from an extended real estate crisis and years of underwhelming stock market performance, leading millions to pursue the security of bank deposits. As rates continue to decline toward 1 percent, that capital is increasingly seeking a new destination. Investors are considering a shift towards stocks, wealth management products, or insurance, aligning with Beijing’s initiatives to foster sustainable market growth that supports the wider economy. “I can’t wait to make some money from the capital market,” said Min Chen. She intends to transfer the funds into mutual funds, as her employment restricts her from purchasing stocks directly. Despite the deposits yielding 3.1 per cent, she expresses regret over missing the recent stock rally and is placing her bets on further gains to come.
According to a December report, approximately 50 trillion yuan in deposits with maturities exceeding one year will reach maturity in 2026, marking an increase of 10 trillion yuan from the previous year. Analysts indicated that approximately 30 trillion yuan is held at large state-owned banks, with a larger portion of the total set to mature in the first half of the year. The shift is already underway, with demand for participating insurance policies at some of the largest insurers exceptionally strong as investors seek steady returns in a low interest rate environment, according to sources. Motivated by a robust resurgence in stocks, which have gained more than $1 trillion in market value in just the past month, some investors are also venturing into equities. Chinese stocks have exhibited an upward trend since April, demonstrating resilience amid global tariff tensions, while the country’s advancements in AI have continued to attract buyers. Gains have been particularly notable in technological stocks, as evidenced by the Nasdaq-like Star 50 Index, which has risen over 12 percent in 2026. Gold prices have reached unprecedented levels, with Chinese investors contributing significantly to the surge.
It signifies a shift from previous years, when Chinese savers would travel great distances solely to secure the best bank deposit rates amid a downturn in the stock market. Chinese banks have reduced deposit rates seven times since 2021 to safeguard their margins, which have been diminished as Beijing mandated them to provide low-cost loans to bolster the economy. Several smaller banks have reduced term deposit rates to slightly above 1 per cent. Daisy Wu expressed her dissatisfaction with the 5 per cent return on a 5 million yuan wealth management product that is set to mature next month. She experienced greater success with stocks and a quantitative fund, which yielded a return of 25 percent last year. “I’m now a homemaker, and I have time to actively participate in stock trading,” stated Wu from Shanghai. “I’m optimistic about the market this year.” On a broader scale, the migration of savings into stocks may be more indirect and measured, boding well for Beijing’s intentions to foster a so-called “slow bull market” that enables better wealth creation and boosts consumer spending. May Yan stated, “While it’s inevitable that some might just walk away from bank deposits, historically more than 90 per cent of the tens of trillions of yuan in savings that mature annually stayed within the banking system.”
“The money will be free-flowing,” Yan stated. “However, from the banks’ viewpoint, they can continue to strive to keep clients within the system by promoting the wealth management products, insurance, and funds they assist in distributing.” Huatai anticipates that stocks will gain from households reallocating their deposits into wealth management products, fixed-income schemes, and participating insurance policies, all of which incorporate some degree of equity holdings in their underlying assets. Beijing is striving to prevent a recurrence of the boom-and-bust cycles witnessed over the past decade, following significant stock benchmarks reaching multi-year highs in 2025. The CSI 300 Index has experienced an upward trajectory for two consecutive years following a three-year downturn, currently reflecting an increase of nearly 3 percent in 2026.
The rapid gains prompted authorities to intervene last week, tightening the screws on margin financing. Regulators have requested that major brokerages provide reports on margin financing demand and refrain from actively promoting account openings or advocating aggressive market views to investors, according to sources. Authorities are also closely monitoring trading and will take timely measures to ease any speculation, said sources who requested anonymity while discussing private information. In September, it was reported that Beijing was contemplating measures such as the removal of certain short selling restrictions to temper the rally. Currently, it appears that certain investors are beginning to understand Beijing’s message. Echo Huang stated that she is withdrawing her 200,000 yuan deposits due in February, but direct stock investments are not an option for her. The 41-year-old has recently transferred 700,000 yuan from fixed-term deposits that matured last month into annuity insurance in pursuit of higher yields. “I already have 1 million yuan in stocks so it might be a little bit aggressive to buy more,” said Huang. “However, it is quite challenging to explore other options since there are not many viable alternatives available.”
