Cover Story: Where Best to Invest in China’s Low-Interest-Rate Era

Chinese investors navigating unchartered waters in search for decent returns in a time of low interest rates

When Li Zhen went to renew the 50,000 yuan ($6,824) she had locked into a 5-year fixed deposit back in 2020, she was taken aback by the bank’s latest offering. The interest rate for same term deposits at large state-owned banks had fallen to around 1.6%, a stark contrast to the 4.2% she had earned five years ago.

Finding a reliable, safe alternative with decent returns is no easy task. Most wealth management products and money market funds now offer annual returns well below 2%.

Like Li, Chinese residents are finding it increasingly difficult to decide where to park their money in an era of historically low interest rates. With traditional investment avenues yielding less and less, both individuals and institutions are scrambling to find new strategies in the face of a shifting economic landscape.

China’s economy is under increasing pressure from weak domestic consumption and rising external uncertainties, prompting policymakers to increase efforts to stimulate growth. As the central bank adopts a looser monetary policies, interest rates are trending downward.