Central Bank: The allocation and selection of residents' savings assets between bank deposits and financial assets such as asset management products will become more diversified, and the liquidity situation of the entire financial system and the real economy will also undergo similar significant changes

The central bank released the 2025 Q4 China Monetary Policy Implementation Report. Column "3" points out that in Q3 2025, the growth rate of household deposits has declined from a high level, attracting increased attention and discussions about the "loss" of bank deposits. Over the past year, the scale of asset management products has grown rapidly. Viewing these phenomena from the perspective of the merger of asset management products and bank deposits can better observe the liquidity situation of the financial system. As China's financial market continues to deepen, direct financing is accelerating, and financing channels are becoming more diversified. The allocation and selection of household savings assets between bank deposits and financial assets such as asset management products will become more diversified, which will more directly affect the structure of bank liabilities, but will not directly equate to significant changes in the liquidity situation of the entire financial system and the real economy. Currently, the social financing environment remains relatively loose, and financial support for the real economy is solid. Observing the merger of assets and liabilities in a more diversified manner is conducive to better comprehensively assessing actual monetary and financial conditions. Column 3 looks at the total liquidity from the perspective of the merger of asset management products and bank deposits. In Q3 2025, the growth rate of household deposits has declined from a high level, attracting increased attention and discussions about the "loss" of bank deposits. Over the past year, the scale of asset management products has grown rapidly. Since Q2 2025, the scale of financial institutions' asset management products has accelerated. By the end of October, the growth rate of asset management products reached the highest level since the implementation of the new asset management regulations. By the end of the year, the total asset balance of asset management products reached 120 trillion yuan, a year-on-year increase of 13.1%, with a cumulative increase of 13.8 trillion yuan for the year, which is 2.2 trillion yuan more than the previous year. Among various asset management products, bank wealth management and public funds, which are upstream in the funding chain, have a large market share and have also grown rapidly, with year-end growth rates reaching 10.6% and 14.3%, respectively. The rapid growth of asset management products is the result of investors weighing returns and risks under the conditions of interest rate marketization. In recent years, the growth rates of asset management products and bank on-balance-sheet deposits have generally shown a trend of "one rising while the other falls" (see the following chart). Since 2024, deposit rates have continued to decline, with the one-year fixed deposit benchmark rate cumulatively decreasing by 0.5 percentage points, while the yields of cash management wealth management products, which have deposit-like characteristics, have remained overall higher than bank deposit rates during the same period, and the yield levels of other asset management products are even higher than those of cash management wealth management. Against this backdrop, households and enterprises are increasingly allocating assets towards wealth management, funds, and other asset management products, with the growth rate of asset management funds raised from households and enterprises continuing to rise. By the end of 2025, the balance of funds from households and enterprises for asset management products was 56.3 trillion yuan, a year-on-year increase of 9.7%, which is 7.9 percentage points higher than at the end of 2023, and 2.4 percentage points higher than the growth rate of household and enterprise deposits during the same period. From early 2024 to the end of 2025, funds from households and enterprises increased by a cumulative 9.4 trillion yuan. The newly added assets of asset management products are mainly directed towards interbank deposits and certificates of deposit. Fixed-income assets are the main part of asset allocation for asset management. By the end of 2025, over 80% of asset management products were directed towards fixed-income assets, with newly added assets mainly concentrated in interbank deposits and certificates of deposit At the end of the year, the allocation of asset management products to interbank deposits and certificates of deposit totaled 28.7 trillion yuan, a year-on-year increase of 18.9%, with a cumulative increase of 4.6 trillion yuan for the whole year, accounting for about 50% of the newly added underlying assets of various asset management products, an increase of more than 20 percentage points compared to the same period last year. In addition to deposits and certificates of deposit, bonds, stocks and equity, and non-standardized debt are also important investment directions for asset management products. Since 2025, the growth of bonds and non-standard debt has been relatively stable, while stock assets fluctuate with market conditions. It should be noted that if residents convert deposits into asset management products, and these asset management products are directed towards interbank deposits and certificates of deposit, it will directly increase the deposits of non-bank institutions in banks. If directed towards other underlying assets, it will ultimately also convert into deposits of enterprises and related institutions, which will eventually flow back into the banking system. The rapid growth of asset management products has also changed the structure of bank deposits to some extent. Recently, the proportion of household and corporate deposits in banks has decreased, while the proportion of interbank deposits has increased. However, when these two major categories of deposits are combined, the growth rate is basically close to that of the broad money supply M2, and there has been no significant fluctuation overall. If asset management products are considered in conjunction with bank deposits, using a balance sheet approach and excluding transactions between asset management and banks, it helps to comprehensively assess the relationship between asset management products and deposit structure as well as the liquidity situation in society, better reflecting the overall liquidity changes in the financial system. The total of liquid financial instruments held by the non-financial sector, such as currency, deposits, and the principal raised by asset management, can serve as a reference indicator for the total liquidity. Data shows that by the end of 2025, this indicator has increased by about 8.1% year-on-year, showing a stable growth trend in recent years. Data source: People's Bank of China. Figure: Growth rate of household and non-financial enterprise deposits, total liquidity, and total assets of asset management products. Overall, as China's financial market continues to deepen, direct financing is accelerating, and financing channels are becoming more diversified, the allocation and choice of residents' savings assets between bank deposits and financial assets such as asset management products will become more diverse. This will more directly affect the structure of bank liabilities, but it does not directly equate to significant changes in the liquidity situation of the entire financial system and the real economy. Currently, the social financing environment remains relatively loose, and financial support for the real economy is solid. Observing the combined assets and liabilities in a more diversified manner is conducive to better comprehensively assessing the actual monetary and financial conditions. Risk Warning and Disclaimer The market has risks, and investment requires caution. 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