Slower saving deposit growth not to threaten next year's economy: Expert

The slower saving deposit growth of Chinese individuals will not exert much influence on the next year's economy, said an expert with the think tank of National Reform and Development Commission (NRDC) Monday.

He Xiaoming, a researcher with the Institute of Economic Structure and Management under the NRDC said slowdown of saving deposit growth has neither lasted long nor declined much.

"The growth of saving deposit of Chinese individuals began to slow down this year, which is a new phenomenon in Chinese economy," said He.

He quoted the statistics that the saving deposit grew only 14.2percent year-on-year this July, which is 4 percentage points lower compared with the same period last year.

"The growth rate has been declining for four consecutive months by July, the first time in the past decade," said He.

Meanwhile, retail sales did not increase much over last year. Instead of putting their money away in savings, he believed Chinese people were investing in funds, insurance, state bonds or corporate bonds with high returns. He said the majority probably went to non-government loans.

As the state tightened bank loans this year, many small or medium-sized enterprises felt strained in the money chain and turned to non-government loans with high interest for floating capital, said He.

He quoted a media report about booming Wenzhou, a city in east China's Zhejiang Province. In July, the non-government loans reached 67.32 million yuan (some 8 million US dollars), a year-on-year increase of 23 percent.

He said China has been concerned about the great amount of saving deposit, which might threaten the demand and supply, as well as investment if being put into the market suddenly. Therefore, the slower growth could be a good thing, said He.

Meanwhile, He is worried that the saving deposit has been transformed into investment in the form of non-government loans.

"Local governments must take the initiatives to regulate the loans in order to prevent another round of investment robust," he said.

He also worried that the non-government loans of high risks may cause uncertain elements and hinder the healthy growth of the economy, calling for the legislation of relevant laws and regulations.

Source: Xinhua