The era of high-yield, long-term savings in China is rapidly drawing to a close. Following the disappearance of three- and five-year fixed deposits, several of China's private lenders have now begun suspending two-year deposit products. Chongqing Fumin Bank recently announced a total halt on new inflows for its two-year and longer-term fixed deposit series across all digital channels, signaling a significant shift in the banking sector’s liability management.
This retreat is not an isolated incident. Beijing Zhongguancun Bank, Hunan Sanxiang Bank, and several other digital-first lenders like WeBank and MYbank have either removed long-term options or labeled them as 'sold out.' The move reflects a harsh reality for private banks that once lured customers with aggressive rates: the high-cost deposit model is no longer sustainable as high-quality lending opportunities dry up.
The banking sector is currently grappling with what analysts call an 'asset famine.' With credit demand weakening and regulatory pressure on net interest margins intensifying, banks are actively shedding high-cost, long-duration liabilities to protect their bottom lines. In a notable market distortion, several institutions now report an interest rate inversion, where three-year deposit rates actually exceed those of five-year products, further discouraging long-term lock-ins.
For China's private banks, which have historically relied on third-party internet platforms for rapid scale, the tightening of 'co-lending' regulations has added further strain. These banks are now pivoting away from the volume-driven growth of the past decade toward a more conservative stance. While major state-owned banks have yet to follow suit with outright suspensions, they are increasingly resorting to quota management and lower rates to achieve similar ends, solidifying a nationwide environment of low interest rates.