Chinese Move to Wealth Products May Undermine Bank Stability
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Lin Baozhen, a 61-year-old retired accountant in Shanghai, is a dream customer for Chinese banks. For a decade, she has kept her money at China Construction Bank Corp. in an account currently paying 3.5 percent interest.
Not anymore. This month, Lin moved half her 800,000 yuan ($127,000) savings into a 95-day investment product offered by the bank that guarantees the principal and pays 5.5 percent annualized returns -- 1 percentage point higher than the inflation rate. Like other Chinese moving deposits to higher-yield investments in record numbers, Lin plans to shop around for the best rates for the rest.