China rate liberalisation unlikely to trigger deposit war

Shanghai

CHINA'S landmark decision to scrap a long-standing ceiling on bank deposit rates is unlikely to have much impact on the real economy - or help credit-starved smaller firms - as lenders focus on protecting margins rather than competing for new funds.

The weekend move freed up China's interest-rate market, allowing lenders to competitively price deposits to attract more funds at a time when more and more retail investors are choosing to put their savings into more lucrative online financial wealth management products (WMPs).