In the first quarter of 2026, the total RMB deposits in Beijing reached 30.9 trillion yuan, making it the first city in China to exceed the 30 trillion yuan deposit scale. Analysts believe that this doesn’t reflect a thriving economy in Beijing but rather a situation where businesses are reluctant to expand investments, residents are hesitant to spend, and there’s a financial stagnation, indicating that China has entered a “liquidity trap.”
According to the latest financial statistics released by the People’s Bank of China’s Beijing Branch, as of the end of March 2026, the RMB deposits in Beijing reached 30.9 trillion yuan, a year-on-year increase of 9.7%, with an increase of 1.2 trillion yuan from the beginning of the year. Beijing has become the first city in China with a deposit scale exceeding 30 trillion yuan.
Breaking down the deposit composition, as of the end of March, non-financial enterprise deposits amounted to 10.86 trillion yuan (35.2%); household deposits reached 7.79 trillion yuan (25.2%); institutional deposits stood at 7.01 trillion yuan (22.7%), significantly higher than the national average of 15%; non-bank deposits were at 4.94 trillion yuan (16%); with the remainder from fiscal and overseas deposits.
During a press conference, the People’s Bank of China’s Beijing Branch mentioned that “the statistical scope of financial institutions in the Beijing area has been adjusted since 2026,” and data has been released based on the revised caliber starting in March, with related growth rates comparable to the original caliber. By retrospectively adjusting the caliber, Beijing’s deposit balance had reached 30.15 trillion yuan in January 2026.
On May 13th, financial commentator Xiao Yi told Epoch Times that these figures do not indicate a flourishing economy in Beijing but rather a situation where, due to slowing growth, insufficient investment returns, and decreased risk appetite, there is a significant “hedging and depositing” of social funds on a large scale.
It is noteworthy that in recent years, state-owned major banks and most joint-stock banks have successively lowered deposit interest rates, resulting in overall low deposit rates in the Chinese banking industry in recent years. In April 2026, the four major state-owned banks in China – Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank – completely unified their deposit benchmark rates. The annual interest rate for current deposits is 0.05%, one-year fixed-term deposits at 0.95%, two-year term deposits at 1.05%, three-year term deposits at 1.25%, and five-year term deposits at only 1.30%.
In alignment with the state-owned major banks, many small and medium-sized banks also lowered their deposit rates in April. For example, Xiamen Bank adjusted its one-year, three-year, and five-year fixed-term deposit rates to 1.2%, 1.4%, and 1.4% respectively. Jilin Bank also reduced its three-year fixed-term deposit rate from 1.75% to 1.70%.
Since May, several small and medium-sized banks have been announcing consecutive reductions in interest rates for RMB deposit products, including notice deposits and fixed-term deposits.
Despite the low deposit rates, both enterprises and residents continue to show a strong preference for deposits.
Xiao Yi pointed out that household deposits exceeding 7 trillion yuan, and still growing, reflect that residents are not keen on spending and are hesitant to invest. This indicates a decline in consumer spending tendencies and a strengthening of precautionary savings, typical characteristics of a “balance sheet contraction cycle.”
He further explained that non-financial enterprise deposits accounting for 35%, with a scale exceeding 10 trillion yuan, reveal that a large amount of corporate funds are stagnant in banks. This signifies a continuous decline in corporate risk appetite, lack of confidence in the future, and reluctance to expand investments. The “corporatized deposits” characteristic is evident- most of Beijing’s deposit-taking enterprises are central state-owned enterprise headquarters, large-scale state-owned enterprises, and financial affiliates, utilizing a large amount of credit resources inefficiently. The phenomenon of substantial credit funds not being used for business operations but rather being idle in banks results in financing difficulties for small and medium-sized private enterprises and the accumulation of funds by large state-owned enterprises, indicating a structural imbalance in China’s financial resource allocation.
Regarding the phenomenon of non-bank financial institution deposits nearing 5 trillion yuan, Xiao Yi analyzed, “The colossal scale of funds in securities firms, funds, insurance, wealth management, trusts, and other non-banking institutions illustrates that a significant amount of funds circulate within the financial system without entering the real economy for actual investment. This is a classic case of ‘financial stagnation’, where the monetary transmission mechanism is malfunctioning.”
He further analyzed that the institutional deposits exceeding 7 trillion yuan indicate that both fiscal and institutional deposits are high, signaling a decrease in project advancement efficiency and funds not being utilized for immediate expenditure. In other words, fiscal expansion occurs without generating effective economic activities, leading to funds being dormant in accounts.
Xiao Yi offered an analysis to Epoch Times, stating that the core issue behind the 30.86 trillion yuan deposits is that the money supply continues to increase, yet the circulation of money is slowing down, resulting in a situation of “asset scarcity” and “credit contraction” coexisting.
He pointed out, “On one hand, the banking system is flush with liquidity, leading to ongoing growth in deposits; on the other hand, enterprises are reluctant to borrow money, individuals are unwilling to leverage, and local government debt is nearing its limit. In other words, China’s current economic situation has entered a ‘liquidity trap’.”
The “liquidity trap” is a concept proposed by British economist John Maynard Keynes, referring to a situation where monetary policy is entirely ineffective in stimulating the economy, regardless of reducing interest rates or increasing the money supply. A typical manifestation of the “liquidity trap” occurs when expected economic downturns lead to people holding liquid assets becoming unwilling to invest.