Unleashed bank deposits misused in Chinese economy – Asia Times

Unleashed bank deposits misused in Chinese economy - Asia Times

Chinese banks deposits worth trillions of yen were necessary last month to keep the banking system, but the money has not yet been effectively used in the real market. &nbsp, &nbsp,

After officials mandated that Chinese banks stop their long-term process of offering extra attention to depositors, they lost deposits totaling 3.92 trillion yuan ( US$ 542 billion ) in the second month of April 2024. &nbsp,

New renminbi deposits plummeted 51 % to 7.32 trillion yuan in the first four months of 2024 from 14.93 trillion yuan in the same period of last year, the People’s Bank of China ( PBoC ) said on May 11.

At the same time, new yen money fell by 10 % to 10.19 trillion yuan from 11.32 trillion yuan for the same time.

Some research studies made comments on numbers that were worse-than-expected, but they were removed from social media. &nbsp,

According to Bloomberg, economists were unable to view at least seven analysis reports from Chinese securities companies posted on Twitter on Monday. According to the statement, complaints about unknown violations of public account laws were made about the social media platform. &nbsp,

According to the review, the incident highlighted China’s growing difficulty in getting accurate financial information. &nbsp,

Where’s the income?

According to the PBoC’s standard, island Chinese banks may offer interest no higher than 1.45 % on one- time deposits. &nbsp,

According to some economists, people were strongly encouraged to withdraw their deposits from banks in order to either purchase wealth management products with an average yield of 4 % or to refinance mortgage loans to save a 4.9 % cost. &nbsp,

The yuan deposit drop in April was attributed to Chinese institutions ‘ new policy of not charging savers any additional interest, according to Ming Ming, chief economist at CITIC Securities. He claimed that numerous individuals purchased money management goods with their money.

He claimed that as new payments typically grow slower or drop in April and July as Chinese banks attempt to meet their goals in March and June, seasonal factors also contributed to the decline. &nbsp,

Foreign banks have been fighting for deposits for the past two years as PBoC has continued to lower loan rates to boost the economy. &nbsp,

Banks lured lenders with “manual attention subsidies”. In response to the disruption of their services caused by computer errors, banks were actually allowed to pay their clients more interest as recompense. &nbsp, &nbsp, &nbsp,

A PBoC-led task force established in 2013 called the Self-Disciplinary Method for the Costs of Market-Oriented Interest Rates to order Taiwanese businesses to formally end this process by the end of April. &nbsp, &nbsp,

Even if they had already promised their clients, all banks may stop adding more attention to the PBoC standard.

It claimed that the process lacked foolish competition between banks, stifled the flow of money, and failed to foster a suitable interest rate environment to support real economic growth. &nbsp,

Bad credit demand

This past Saturday, the PBoC said that China’s aggregate financing to the real economy ( AFRE ) or total social financing, one of the key indicators of China’s credit demand, was 12.73 trillion yuan in the first four months of this year, down 3.04 trillion yuan from the same period of last year.

The AFRE was 12.93 trillion yuan in the first fourth. This indicates the second decline in the value of 200 billion renminbi since 2005, which is significant. &nbsp,

On Monday, the upstream yen fell to 7.2347 per US dollar, down 101 foundation points from last Friday and the lowest level in two weeks, as a result of the bad credit information. &nbsp,

Asia Times discovered that China’s AFRE figures in April, which appear to be very poor before annual adjustment, fall one common mistake below the linear pattern regression line using the US Census algorithm from the Eviews econometrics platform. In short, they are on the poor side but within normal parameters. And they are most likely the result of subpar financing to the real estate industry.

According to a study released by Minsheng Securities, the “manual attention subsidies” process has not yet been able to stimulate the economy as expected. If the new easement of property laws starts to show signs of effects, China’s AFRE will finally regain momentum for growth. &nbsp, &nbsp,

A hundred second-tier cities have made announcements to allocate their home purchase restrictions after May 9 with the exception of Hangzhou, Xian, and Fosan. These presentations increased property values.

Shares of Shimao Group Holdings have gained 133 % to close at HK$ 1.05 ( 13.4 US cents ) on Monday from last May 8. The value of China Aoyuan stock increased to 26 HK CNYs.

Read more: Hong Kong exports rise despite the Sino-US trade war

&nbsp, Follow Jeff Pao on X: &nbsp, @jeffpao3