(Yicai) Nov. 12 -- Deposits held by non-bank financial institutions in China accounted for 11.2 percent of all deposits as of Sept. 30, up from 9 percent at the end of 2023, according to a report released by the People’s Bank of China yesterday.

The increase reflects changes in the country's financing structure, growing public financial awareness and interest in wealth management, as well as differences in returns across financial products, the report said. Deposits held by non-bank financial institutions surged 19.1 percent at the end of the third quarter from a year earlier.

The growing preference among households and businesses for time deposits over demand deposits is also worth noting. The share of corporate demand deposits tumbled to 27.9 percent at the end of the third quarter from 38.4 percent at the end of 2020, the central bank said. The share of household demand deposits dropped to 25.4 percent from 35.3 percent over the same period.

By contrast, in economies such as the United States and Europe, deposits serve primarily as transactional funds, resulting in a higher proportion of demand deposits, industry experts said. In China, time deposits account for a larger proportion, largely because bank deposits make up the bulk of household financial assets. In a low-interest-rate environment, Chinese households are more inclined to place their money in time deposits to earn higher returns.

In terms of deposit holders, corporate deposits in China stood at about CNY172 trillion (USD25.8 trillion) as of Sept. 30, accounting for 49.3 percent of all deposits. This was higher than the corresponding share of 35.6 percent in the US and 40.2 percent in Japan, largely due to deposits held by government agencies, public institutions and non-bank financial institutions.

The changes also reflect the growing diversion of household and corporate savings into financial products such as stocks, bonds, wealth management products and asset management products, with funds subsequently flowing back into the banking system in the form of deposits held by non-bank financial institutions, financial experts said.

At the same time, the relatively high proportion of time deposits held by businesses, government agencies, public institutions and non-bank financial institutions also provides some insight into the investment and consumption appetite of companies and households.

Editor: Kim Taylor