China's RMB Deposits Soar in August

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Banks in China saw increased amounts of RMB deposits in August. It's thanks to a drop in stock markets, which has many concerned their money may not be safe on the trading floor.

China's RMB deposit amount strongly rebounded in August after a drop in July, the country's central bank announced on Sunday.

In July, China's gross RMB deposit amount shank by 668.7 billion yuan, while it grew by 696.2 billion in August. It's thanks to deposits by citizens and businesses and the fluctuation of stock markets. Chinese stock markets dropped in August, with the Shanghai and Shenzhen Composite Indexes falling almost five percent.

[Guo Tianyong, Director, Chinese Banking Industry Research Ctr.]:
"Old statistics show that stock markets often move against bank deposits. When the stocks drastically went up, bank deposits plunged. And when stocks plummeted, a large amount of money flew back into banks."

Changes of financial planning services of banks also resulted in the deposit rise in August. Chinese banks offered a large amount of financial planning products in the first half of 2011. The periods of some products were as short as a few days, even one day.

[Guo Tianyong, Director, Chinese Banking Industry Research Ctr.]:
"The number of very-short-term financial planning services launched by banks sharply reduced. At the same time, most products initiated in the first half of this year have come due for cashing. These two factors increased this month's deposit amount."

The Chinese bank watchdog has noticed the short-term financing services and has started controlling the products in recent weeks.

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