China's $7 trillion cash pile begins shifting into higher-yield assets

Chinese households are scouring for higher-yielding investments as roughly $7 trillion in time deposits come due this year, a shift that could provide additional fuel for the nation’s financial markets. 

The mountain of savings is a legacy of a prolonged real estate crisis and years of lackluster stock returns, which prompted millions to seek the safety of bank deposits. With rates now sliding toward 1 per cent, that capital is increasingly looking for a new home.

 

Investors are weighing a move into stocks, wealth management products or insurance, which would align with Beijing’s efforts to cultivate sustainable market gains to support the broader economy.

 

 

“I can’t wait to make some money from the capital market,” said Min Chen, a civil servant from Hangzhou who has 2 million yuan ($287,000) in certificates of deposit maturing this month. She’s planning to shift the money into mutual funds as her job prevents her from buying stocks directly. Although the deposits yield 3.1 per cent, she regrets missing the recent stock rally and is betting more gains will follow.

 

About 50 trillion yuan in deposits with maturities of more than one year will expire in 2026, an increase of 10 trillion yuan from last year, according to a December report by Huatai Securities Co. analysts led by Zhang Jiqiang. Some 30 trillion yuan is held at large state-owned banks, with a greater share of the total maturing in the first half of the year, the analysts said.

 

The shift is already underway, with demand for participating insurance policies at some of the largest insurers exceptionally strong as investors seek steady returns in a low interest rate environment, according to people familiar with the matter. 

 

Encouraged by a strong comeback in stocks, which added over $1 trillion in market value over the past month alone, some are also diving into equities. Chinese stocks have trended upward since April, showing off resilience during bouts of global tariff tensions as the country’s advances in AI continued to woo buyers. Gains have been more pronounced in technological stocks, with the Nasdaq-like Star 50 Index up more than 12 per cent in 2026.

 

Gold prices have also hit records, with Chinese investors among those piling in to fuel the rally.  

 

It marks a turnaround from earlier years, when Chinese savers would trek hundreds of miles just to find the best bank deposit rates as stocks were slumping. Chinese banks have trimmed deposit rates seven times since 2021 to protect their margins, which were eroded as Beijing ordered them to make cheap loans to support the economy. Some smaller banks have pushed term deposit rates down to just over 1 per cent. 

 

Daisy Wu, a former researcher at an asset management firm, was dissatisfied with the 5 per cent return on a 5 million yuan wealth management product that matures next month. She had better luck with stocks and a quantitative fund, which returned 25 per cent last year.

 

“I’m now a homemaker, and I have time to actively participate in stock trading,” said Wu from Shanghai. “I’m optimistic about the market this year.” 

‘Slow Bull’

On a broader scale, the migration of savings into stocks may be more indirect and measured, boding well for Beijing’s intentions to foster a so-called “slow bull market” that enables better wealth creation and boost consumer spending. 

 

May Yan, head of Asia financials research at UBS Group AG, said while it’s inevitable that some might just walk away from bank deposits, historically more than 90 per cent of the tens of trillions of yuan in savings that mature annually stayed within the banking system. 

 

“The money will be free-flowing,” Yan told a Shanghai briefing this week. “But from the banks’ perspective, they can still try to retain the clients within the system by touting the wealth management products, insurance and funds they help distribute.”

 

Huatai also expects stocks to benefit from households’ reallocation of deposits into wealth management products, fixed-income schemes and participating insurance policies, which all have some level of equity holdings in their underlying assets. 

 

Beijing is trying to avoid a repeat of the boom-and-bust cycles over the past decade, after major stock benchmarks hit multi-year highs in 2025. The CSI 300 Index has risen for two straight years after a three-year slump, and is up almost 3 per cent in 2026. 

 

The gains were deemed too fast, prompting authorities to step in last week to tighten the screws on margin financing.

 

Regulators have asked major brokerages to report margin financing demand and avoid actively promoting account openings or pushing aggressive market views to investors, people familiar with the matter said. Authorities are also closely monitoring trading and will take timely measures to ease any speculation, said the people, who asked not to be identified discussing private information.  

In September, Beijing was also said to be considering measures including removal of some short selling curbs to cool the rally, Bloomberg reported. 

 

For now, some investors seem to be getting Beijing’s message. 

 

Echo Huang, who works in the publishing industry in Hangzhou, said that while she’s withdrawing her 200,000 yuan deposits due in February, direct stock investments aren’t in the cards. The 41-year-old has just moved 700,000 yuan from fixed-term deposits that matured last month to annuity insurance for higher yields. 

 

“I already have 1 million yuan in stocks so it might be a little bit aggressive to buy more,” said Huang. “But it’s a pain to look at other choices as there aren’t many good alternatives out there.”