[The Epoch Times, July 1, 2022](Reported by Li Siqi, a reporter from the Epoch Times Special Department) At the end of June, China’s four major “state-owned” banks all had a rare situation in which the interest rate of 3-year deposits was equal to or higher than that of 5-year deposits. Phenomenon. Professional analysis shows that the market lacks confidence in the future economy and the demand for long-term loans is very poor.
Bank of ChinaDepositors of China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China have noticed recently that there is no difference in interest rates between 3-year time deposits and 5-year time deposits.upside down” phenomenon – the 5-year fixed deposit that should have higher interest has been equal to or lower than the 3-year fixed deposit interest.
Ph.D. in Economics who has long been concerned about the Chinese economyLi SongyunHe told The Epoch Times on June 30: “First, the bankdeposit rateThe decline is a general trend, not only the 5-year deposit rate, but also the 1-year to 3-year deposit rate. This is because, in the face of economic downward pressure, the Central Bank of China made a The deposit reserve ratio and the 1-year and 5-year loan market quoted interest rates (LPR) were cut respectively in January. “
The purpose of reducing the deposit reserve ratio is to release monetary liquidity, and the purpose of reducing the LPR is to promote credit demand, because LPR is the benchmark interest rate for bank loans. “Although monetary policy has eased, this round of RRR cuts and interest rate cuts has not had the expected effect, and investment and consumer demand are still very weak.”Li Songyun“As a result, the CCP further lowered the deposit reserve ratio in April this year, and sharply cut the 5-year LPR in May,” he said.
“The lower LPR means that banks’ lending rates will drop. Although this will reduce the cost of loans for businesses and consumers, it will squeeze banks’ profit margins. In particular, because of the shrinking real estate industry and the repeated relapses of the epidemic, banks are currently A lot of bad debts have accumulated. Therefore, the bank has to reducedeposit rate. “
At the end of April this year, a number of large state-owned and joint-stock banks in China took the lead in lowering the interest rates on time deposits and large-denomination certificates of deposit with a maturity of more than one year, by about 10 basis points.
Why is the current 3-year deposit rate higher than the 5-year deposit rate? Li Songjun’s analysis: “First of all, this is the result of policy guidance. Because the 5-year LPR declines more than the 1-year LPR. The 5-year LPR determines the deposit and borrowing rates for 5-year and longer periods, while The one-year LPR determines the deposit and borrowing rates for the three-year term.”
“In addition to stimulating the demand for credit in the real economy, the authorities are also trying to stimulate consumer demand for housing loans, because these types of loans are long-term loans with a maturity of more than 5 years. The data in May showed that under various rescue measures, Demand for real estate remains sluggish and all indicators are deteriorating further.”
According to data released by Crane, the sales performance of China’s top 100 real estate companies in the first five months of this year fell by 52.3% year-on-year, a larger decline than the figures in the first four months. Crane serves more than 95% of China’s top 100 real estate companies.
According to data from the Chian Index Academy, in the first five months of 2022, the average sales of the top 100 real estate companies was 27.393 billion yuan (about 4.1 billion U.S. dollars), a year-on-year decrease of 50.7%, and the sales exceeded 100 million yuan. The number of real estate companies worth 100 million yuan decreased by 48 from the same period last year to 70.
“Secondly, this phenomenon also shows that banks are not short of deposits now, but no one borrows money, especially the demand for long-term loans is very poor, because everyone is not optimistic about the future economy.” Li Songyun said.
Judging from the social financing and credit data in May, the recovery of medium and long-term loan demand from enterprises and residents is still lower than expected. On the contrary, residents’ willingness to save is very strong. In the first five months of this year, resident deposits increased by 7.86 trillion yuan (about 120 million U.S. dollars), a year-on-year increase of 50.6%.
Li Songjun finally concluded: “In the context of the economic downturn and the government’s encouragement of consumption and investment, bank deposit interest rates will definitely get lower and lower.”
Responsible editor: Lian Shuhua#