China’s Five-Year Deposit Rates Edge Up as Smaller Lenders Compete for Deposits

Average interest rates on Chinese banks’ five-year deposits and certificates of deposit edged up in July, slightly defying a broader downward trend as smaller lenders raised rates to compete for deposits against major state-owned banks.

The divergence underscores intense competition for deposits across China’s banking sector. Smaller rural and privately owned lenders are facing growing pressure from a siphon effect after the country’s biggest banks resumed offering long-term certificates of deposits, worsening deposit outflows at a time when the financial system is pushing to lower funding costs.