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The growth rate of China's January resident saving deposit dropped 3.5 percent over a month ago, suggesting room for another raise of interest rates, analysts said.
Representatives of the , the central bank, said Thursday that saving deposits last month grew 268.3 billion yuan (32.4 billion US dollars). But the growth rate saw a significant decline since the interest rate hike last October.
The rate was also 8.6 percent less than that of January 2004, meaning a 292.4 billion yuan (35.23 billion US dollars) decline, the official statistics indicate.
The growth rate of China's resident saving deposit has experienced a rare decline. The rate has been growing since last February and picked up in October when the central bank decided to raise the interest rate for the first time in nine years to cool down the country's heating economy.
The interest rate hike sent an instant boost to resident saving deposit, which maintained the strong momentum till the start of 2005.
"The adjusted interest rate is still low," said Ba Shusong, deputy director of financial institute of the Development Research Center under the State Council.
The low interest rate caused people to pull deposits out of the banks and lend their money to enterprises through informal channels where profits were much higher, he said.
Another economist, Yi Xianrong, research fellow with finance department under the Chinese Academy of Social Sciences, shared the same view as Ba.
"If this trend continues, the central bank will probably consider another raise of current interest rate," Yi said.
Ba said the decline, however, was not necessarily all bad, adding that Chinese people are putting their money to other uses, such as buying houses and other property.
For decades, resident's wealth was largely represented by bank savings. This was not healthy, but fortunately the wealth structure has started to change," Ba said.
The financial statistics of January, released on Thursday, also revealed a decline of increase rate in bank loans, a trend that has begun since late 2004. Bank loans in January reached 18.11 trillion yuan (2.18 trillion US dollars), rising 14.2 percent year-on-year, but the growth rate was down 5.9 percent compared with the same period last year.
The bad news for banks was somewhat offset by the decline of resident saving deposit because the banks had less interest to pay,Yi said.
"Generally speaking, the economy is stable now. So the decline of saving deposit is not likely to prompt any action from the authorities," Ba said.
(Xinhua News Agency February 19, 2005)
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