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People Still Favor Savings
The results of a quarterly inquiry among city and town depositors show that people are more willing to have their money deposited in banks than invest it in stocks and government bonds.

The inquiry was made recently by the People's Bank of China (PBOC), the country's central bank.

The number of families which take stocks and government bonds as major financial assets, decreased 1.9 and 2.9 per cent respectively in the third quarter this year.

However, the number of people that took deposits as the major ones increased 3.8 per cent, from 61.2 per cent during the second quarter to 65 per cent.

The inquiry also shows that only 10.5 per cent of depositors believe withdrawing deposits to buy stocks is worthwhile under the current price level and interest rate. The percentage is the lowest since 2000.

Meanwhile, the number of people who believe deposits are more worthwhile achieved 27.7 per cent, the highest percentage since the last quarter of 1999.

Chinese residents' deposits had broken the mark of 7 trillion yuan (US$845.4 billion) to reach 7.06 trillion yuan (US$852.7 billion) at the end of August, the PBOC announced earlier.

It increased 12.2 per cent over the same period last year.

The change is mainly due to the readjustment of the stock market, experts say. Investment risks increased greatly because the capitalization of the stock market has shrunk by 20 per cent since June.

In addition, the circulation of government bonds is limited. Therefore, deposits, a much safer investment, has become residents' first choice.

Moreover, the increase of deposits is owing to the rise of residents' income this year.

The statistic figures from the central bank also show that the structure of deposits has changed and that fixed deposits have increased.

The demand deposits increased 242.3 billion yuan (US$29.3 billion), 41.5 billion (US$5.01 billion) less over the same period last year while fixed deposits increased 366.1 billion yuan (US$44.2 billion), an 239.6 billion (US$28.9 billion) increase.

(China Daily 10/11/2001)

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