As financial data from People’s Bank of China shown, residents’ bank saving deposits rose 167.8 billion RMB in June with 13.6 billion RMB year-on-year growth, changing declining trend in the last two months. Till the end of June, residents’ bank deposits balance went up to 17.2672 trillion RMB again. However, as data issued before shown, residents deposits had a net decrease of 445.8 billion RMB with 2.5% decline in April and May.

Residents’ bank saving deposits relates closer with stock market

Experts pointed out the fluctuation of bank saving deposits amount indicates the closer relation between residents’ ban saving deposits and stock market climate, and also shows capitals from saving decline in the past two months doesn’t invest to real economy. The problem of high savings which affects Chinese economy remains.

 “Residents’ bank saving deposits and stock market and other investment channels are forming certain relation with each other.” said by researcher Zhang Liqun from Macro Economy Research Department, Development Research Center, State Council

Since 2006, Chinese capital market has warmed up again; and hot stock market has absorbed numerous residents’ deposits. Data from China Securities Depository & Clearing Corporation Limited shows there were 16.5614 million new added investors in Shanghai and Shenzhen Stock Markets from April to the 12th of June in 2007, and there were only 5.1793 million new added investors in the whole year of 2006. The figures indicate our residents who were fond of saving deposits now change their ideas of investments.

Meanwhile, deposits remove among different banks also were on in Beijing and other big cities. Report of 2006 China Regional Finance Operation published in the end of May in 2007 by People’s Bank of China indicated Beijing residents’ deposits increment started drop after 10 months’ rapid growth since February of 2006.

However, the situation changed again due to Chinese market fluctuated drop in June. Opposite to the decline of new added investors in Shanghai and Shenzhen Stock Markets, residents’ deposits rose up again in June. Bank capitals were out and back again.

Professor Zhao Xijun from Renmin University believes the decline of deposits is due to heated stock market in the past few months. Now the stock market drops back; residents’ capitals would return to banks for safety.

The decline of deposits in the past few months doesn’t mean spring of consumption

In addition, some experts pointe out the fluctuation of bank saving deposits amount also shows capitals from saving decline in the past two months doesn’t invest to real economy. The decline of deposits in the past few months doesn’t indicate spring of consumption.

 “There is no direct relation between residents’ deposit change and consumption”. Said by economist Wang Xiaoguang. As to East Asian countries, residents’ consumption is mostly related with income and income anticipation. In order to stimulate consumption, it is urgent for our government to intensify relative policies to solve residents’ problems, to make residents dare to spend money.

China is one of the countries who have high deposit ratio. Currently there are more than 17 trillion RMB residents’ deposits. The excessive deposits indicate rich accumulation of national wealth on the one side; on the other side, it also exposes weak domestic demands and consumption. It is the responsibility for government to decrease deposit ratio, and stimulate economic development by domestic demands.

Wang Xiaoguang also figures that whether consumption could warm up mainly relies on residents’ income and future income anticipation. Different from western countries, Chinese traditional idea decides that our consumption is mostly affected by anticipation of future income. Therefore, the consumption growth recently is not only related with money earned from stock market, but also with various national policies, such as raising residents’ income, upgrading minimum standard of living for city residents, and perfecting social security.

As to the reasons for high deposits, some experts contribute it to lacking of consumption confidents. The stern job pressure and high cost of education, housing and medical all increase residents’ worries of future life. This is the deeper reason for high deposit and weak domestic demands. And the fluctuation of residents’ bank saving deposits also indicates we should make more efforts to push up domestic demands, especially expand consumption.