As 2026 begins, China’s large-denomination certificate-of-deposit market is undergoing a quiet but consequential reset: interest rates on new issues have accelerated into single digits on an annual basis, tenors have shortened and minimum subscription thresholds for some products have climbed sharply.
Most banks now issue big-ticket deposits concentrated in one-year and shorter maturities, with many under-one-year rates falling below 1 percent and three-year offers commonly under 2 percent. At the same time five-year-plus products have all but disappeared from the market, while a handful of products now require minimum investments measured in millions of yuan rather than the historical baseline of 200,000 yuan.
This retrenchment in retail deposit pricing coincides with a massive maturity wall: roughly 75 trillion yuan of household deposits are expected to come due in 2026, of which about 67 trillion is one-year and longer. Faced with falling returns, many retail clients are not rushing into equities. Instead, savers are redeploying funds within the banking system — moving deposits from large state banks to smaller lenders that still offer modest rate premiums.
Interviews with depositors in Shenzhen illustrate the dynamics. Middle‑aged, risk‑averse households say stability remains their priority and prefer to shop around for the highest guaranteed return, even if that means juggling accounts across several smaller banks to capture promotional rates and in‑kind gifts. Younger depositors, meanwhile, treat the market like a promotional game, splitting sums across new‑customer offers to maximise bonuses.
The pressure on deposit costs is rooted in banks’ shrinking net interest margins. Commercial banks’ net interest margin averaged about 1.42 percent through the third quarter of last year, leaving limited room to sustain higher retail deposit rates. Analysts expect further structural pressure on deposit pricing but predict banks will slow the pace of cuts and rely on product design — shorter tenors and higher entry thresholds — to ratchet down overall funding costs.
Banks are responding with a mix of tactical rate hikes for targeted products and more granular relationship management. Several smaller and regional banks have temporarily lifted rates on three‑year deposits to near 2 percent or higher to win funds, while larger institutions have concentrated on pre‑maturity reminders, bespoke rollover plans and asset‑growth incentives to keep clients. Marketing gifts, staggered rewards for asset increases and one‑customer‑one‑plan strategies are now as important as headline rates in the scramble to retain balances.
The downward shift in deposit yields has implications for other short‑term instruments. Money market funds still offer a modest edge — their average yield last year stood around 1.12 percent and assets under management continued to grow — meaning some savers can get similar or better returns without locking money into bank time deposits. That sets a floor to how far deposit rates can fall before provoking meaningful outflows into non‑bank products.
For the banking system the combination of a huge maturing stock of deposits and compressed margins creates a dilemma. If banks preserve tight rates, they risk losing balances to higher‑paying rivals; if they raise rates broadly they squeeze profitability further. Regulators and banks will be watching rollover behaviour closely in coming months to assess liquidity distribution and the potential need for policy or supervisory responses.
Overall, this is a story of a retail funding market adapting to a low‑rate reality: products are becoming shorter and more exclusionary by barrier to entry, savers are becoming more tactical, and banks are shifting effort from broad rate competition to segmented, service‑led retention. The immediate result is a reallocation of deposits within the banking system rather than a mass exodus into riskier assets, but the longer term may bring tougher choices for both institutions and retail investors.