Maturing time deposits to test investment appetite

A huge wave of maturing household time deposits, totaling tens of trillions of yuan, is set to test the investment appetite of Chinese savers in 2026, potentially reshaping the flow of capital across the country's financial markets as more asset allocation options emerge.

According to estimates by China International Capital Corp, roughly 75 trillion yuan ($10.94 trillion) in household time deposits will mature this year, including about 67 trillion yuan with maturities of one year or longer.

CICC projects that the volume of total household deposits and time deposits of at least one year scheduled to reach maturity in 2026 will increase 12 percent and 17 percent, respectively, from 2025 — equivalent to year-on-year rises of 8 trillion yuan and 10 trillion yuan.

This portion of funds has a relatively low risk appetite, with safeguarding principal as its primary objective. Therefore, while the likelihood of large-scale flows of deposits into the capital market is relatively low, some deposits may still tilt toward gold and silver, bank wealth management products or fund products in pursuit of steady returns. At the same time, a portion of funds with a higher risk appetite may enter the capital market in search of higher profits, said Lian Ping, director and chief economist of the Guangkai Chief Industry Research Institute.

After the large volume of time deposits matures, some funds may enter the stock market directly or through wealth management and fund products. This could significantly increase market liquidity, lower financing costs, promote a reasonable rebound in asset prices, improve expectations for stock market development, and attract more domestic and overseas capital into the equity market, Lian said.

As households gain more asset allocation options, deposit diversion is inevitable. Given the massive deposit base, even a small reallocation could translate into a sizable absolute amount. Over the long term, a gradual and prolonged shift of deposits into other assets — including securities, asset management products and insurance — may already have begun, said Wang Jian, an analyst at Guosen Securities.

Song Xuetao, chief economist at Sinolink Securities, said the main destinations for shifting deposits will be low-risk assets. Bank wealth management products and money market funds, with their high liquidity advantages, are likely to be the primary recipients.

Song estimates that newly added personal WMPs could remain around 3 trillion yuan in 2026, with mid — to low-risk products, mainly fixed-income WMPs, remaining the most popular.

In a low interest rate environment, wealth management institutions have begun expanding higher-risk products that include equity investments to enhance returns. However, mid — to low-risk products continue to dominate the market.

The annual report on China's banking wealth management market shows that by the end of 2025, outstanding bank WMPs totaled 33.29 trillion yuan, up 11.15 percent from the beginning of the year. Of this, products rated Level 2 (moderate-to-low risk) or below accounted for 31.87 trillion yuan, or 95.73 percent, while products rated Level 3 (medium risk) or above accounted for 1.42 trillion yuan, or 4.27 percent.

As large State-owned commercial banks and nationwide joint-stock commercial lenders scale back high-interest long-term deposits and focus on improving asset quality, small and medium-sized banks — mainly rural commercial banks — have adjusted their strategies. They are issuing large-denomination certificates of deposit and temporarily raising time deposit rates, seeking to balance liability cost control with competition for market share through differentiated, regionally tailored products.

As of Thursday, more than 600 announcements on large-denomination certificates of deposit have been issued since the beginning of 2026, the vast majority by rural commercial banks, according to the National Interbank Funding Center.

Several rural commercial banks and village banks have also temporarily raised deposit rates by 10 to 20 basis points this year, mainly targeting specific deposit products and one — to three-year time deposits, often with relatively high minimum thresholds.

At the start of the year, banks face pressure to expand lending and need to attract sufficient deposits to support asset growth. In a market dominated by large banks with strong brand recognition and distribution channels, the most direct way for small and medium-sized banks to consolidate and expand their local customer base is to selectively and temporarily offer moderately higher rates, analysts said.