Liquidity Crunch Hangs China's Banks on a Drying Rack

Choosy savers and cautious monetary policymakers are pressuring Chinese bankers, forcing them to adjust to a new and much drier liquidity landscape.

For many banks, a slow-motion evaporation of cash liquidity has been building since last year and intensified in January. One reason for the latest jolt was a flattening for what had been a steady uptick in savings deposit levels at some banks. A decline in company bank deposits and stricter reserve rules added even more pressure.