Deposits outpaced loans by 44.51 trillion yuan (US$6.57 trillion), the largest gap since 1997, the People’s Bank of China reported. Data from before that year is unavailable.
The balance of deposits denominated in Chinese currency stood at 258.5 trillion yuan, up 11.3% from a year earlier. Loan balances totalled 213.99 trillion yuan, an increase of 11.1%. This marks the first time in 12 years that deposits grew more sharply than loans.
Concerns grew last year about the future of corporate and household finances due to China’s strict zero-Covid policies – which recently were eased – coupled with a slump in the housing market.
China, looking to stimulate the economy, has started refunding value-added taxes, returning 2.4 trillion yuan by Dec 15. Though the measure improved corporate cash flows, private companies remain cautious about making new investments and likely used the money to increase their deposits.
Additionally, Chinese households have an entrenched inclination to save money. When asked about the primary way they use money, 61.8% of people said they would increase the amount put into savings, according to a PBOC survey of 20,000 depositors conducted between October and December.
That percentage was the highest since tracking of comparable data began in 2002. The figure had hovered around 50% until the end of 2021, but spiked in 2022.
Household borrowing demand is also weak. The net increase in the balance of medium and long-term bank loans to households in 2022 was 2.75 trillion yuan, growing 55% less than last year. New loans reached their lowest in eight years, and the decline was the steepest since 2010, before which data is unavailable. Condo transactions and new mortgages both suffered slowdowns.
The PBOC and the China Banking and Insurance Regulatory Commission met on Tuesday with major banks, instructing them to increase lending in sectors such as real estate.
Medium to long-term loans to companies had grown since last autumn, and the balance in December was 3.6 times higher than a year earlier. China appears to be mobilising state-owned banks to increase loans to state-owned enterprises.