The rush for the safety of CDs and other safer wealth management products undermines policymakers’ drive to boost demand and consumption through tax cuts and the relatively restrained property support measures. — Reuters
CHINA’s consumers and companies are tying up trillions of yuan in longer-dated deposits with banks, effectively taking a vast pool of money out of circulation and risking the kind of liquidity trap that hobbled Japan’s economy in the 1990s.
Latest official data show financial institutions issued 5.5 trillion yuan (US$766bil or RM3.5 trillion) worth of long-term deposits known as certificates of deposit (CD) in the first quarter of this year – the largest such quarterly issuance since the product was introduced in 2015.
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