China's Savers Wise Up to Above-Market Rates

Savers’ search for higher yields may undermine the system
Photograph by Jerome Favre/Bloomberg

Lin Baozhen, a 61-year-old retired accountant in Shanghai, was a dream customer for Chinese banks. For a decade she kept her money at China Construction Bank in an account currently paying 3.5 percent interest. No more. 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. That’s one percentage point above the latest inflation rate. “I am not investment-savvy, but it would be stupid of me if I just leave the deposits there doing nothing,” says Lin in the lobby of her bank branch in Pudong. “The math is simple. I need something safe and with a return that can at least beat inflation.”

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