As China enters the critical “opening stretch” of the year for bank balance sheets, a clear split has opened between large state lenders and smaller regional banks. While the big state-owned commercial banks have been trimming long‑dated, high‑coupon deposit products, rural commercial banks and other small lenders have mounted an aggressive drive to attract funds by issuing large‑denomination certificates of deposit and nudging up term deposit rates.
Market filings collected since the turn of the year show the pace and scale of the push: nearly 400 large‑CD issuance notices have appeared on the official money market platform, with rural commercial banks accounting for more than 90 percent of notices and planned issuance totalling in excess of RMB 30 billion. The issuance rhythm accelerated in the run‑up to the Lunar New Year, when dozens of local banks simultaneously published multiple offerings on a single day.
The new products display two conspicuous features. First, maturities are skewing short—three‑month to three‑year tenors dominate—reflecting banks’ desire to avoid locking in expensive long‑term liabilities. Second, offer structures favour larger accounts: many products impose high minimums (commonly RMB 50,000–200,000 for retail purchasers and RMB 10 million for institutional tranches) and limited issue sizes or limited windows, signalling these are targeted, tactical liquidity plays rather than broad retail campaigns.
Concrete examples underline the approach. Zhuhai Rural Commercial Bank rolled out seven tranches on a single day with retail three‑month, six‑month and one‑year CDs paying 1.35 percent, 1.50 percent and 1.60 percent respectively, while a three‑year institutional tranche yielded about 1.85 percent. Other local lenders in Zhejiang, Shaanxi and Shanxi raised one‑to‑three‑year time deposit rates by ten to twenty basis points, often with tiered rates linked to minimum deposit sizes and explicit “limited‑time, limited‑quantity” caveats.
The tactical behaviour is explicable from the balance‑sheet pressures banks face. Net interest margins in China’s banking sector remain at multi‑year lows and loan yields have been sliding, partly because of lower policy‑rate and concessionary lending. For smaller banks with weaker brand franchises and a greater reliance on local deposits, temporarily paying up on short maturities is an expedient way to secure funding for expected credit demand during the “opening” lending season.
Yet the strategy carries trade‑offs. Short‑term, higher‑threshold CDs can concentrate deposits and raise rollover risk; restricting early withdrawals stabilises funding but risks alienating retail clients. At the same time, broader repricing by regional banks increases competition for deposits locally and keeps downward pressure on already thin net interest margins. For regulators and market watchers, the evolving mix of product design, rate relativity versus state banks, and issuance limits will be an important window into local liquidity stress and the health of the banking system’s retail funding model.