BEIJING, March 4 -- To keep on top of China's liquidity situation, Chinese savers may no longer have to work through the financial glossary, but instead just look at their smartphone app.

Millions of investors woke up on Tuesday to find the seven-day annualized interest of the country's first Internet finance product Yu'e Bao eased to 5.93 percent, the lowest level since December.

The fund, established by Jack Ma's Alibaba in June, has more than 81 million users and over 400 billion yuan (about 66.7 billion U.S. dollars) in assets under management, making it China's biggest money market fund.

Similar Web-based money market funds launched by Internet firms Baidu and Tencent also saw their seven-day annualized yields declining near 6 percent.

Despite the fall in interest rates, Web-based money funds are still well ahead of traditional banks which can only pay a maximum 3.3 percent for one-year deposits.

Savers swamped the Internet-based funds seeking interest rates that were substantially higher than the low rates set by the central bank.

The race by big Internet companies to woo savers to pull their money from banks and put it under the management of their funds has weighed on the country's commercial lenders.

"Such money funds have created two myths about themselves," said Lyu Suiqi, deputy dean of the finance department with Peking University. "One is their astonishing speed in development, the other is their high interest."

The popularity of Internet finance rose as China's central bank still tightly controls the interest rates banks can offer savers while fully liberalizing interbank deposits.

The country's largest investment bank CICC said in its latest research note that Yu'e Bao has placed 92 percent of its assets in interbank deposits and used the different terms of maturity between investors to reap high interest.

However, such Web-based money funds may face huge risks, Lyu warned.

"As the assets of Internet finance products like Yu'e Bao increase, so will their liquidity management pressure," Lyu said, adding that such money funds are overrelying on interbank deposits for high interest.

Their ability to bargain with traditional banks will weaken as market liquidity improves and more competitors enter the race, he said.

Yu'e Bao attributed the current decline in interests in money market funds to changes in deposits and credits of financial institutions, bond issues, capital flow between different markets and tax transfer.

The company said the yield of Internet finance and money fund will normally keep moving between 3 percent and 5 percent, with Yu'e Bao posting an average return of 3.95 percent in 2012.

"The public is more concerned about what real changes Yu'e Bao could bring to financial monopoly," said Xu Xuelan, secretary-general of the Chinese Institute of Electronics. "We are expecting much more reform resolve and action in this regard."