On May 15, a long queue waited eagerly outside commercial banks in
south China’s Guangdong Province, trying to get a share of treasury
bonds worth of 2.4 billion yuan. Less than one hour after the banks
opened, all the bonds were sold out and many in the queue left
empty-handed.
Amid the strong economic development of recent years, Chinese
people are becoming more interested in buying treasury bonds, a new
investment channel for most of them. The majority of would-be
buyers are middle-aged and young people. Some prefer T-bonds as a
way of investment as it is not a time-consuming project compared to
share dealing.
Since bank deposit rates have becoming increasingly low as part of
the national policy to stimulate domestic consumption, many
depositors have used some of their savings to buy T-bonds. Ordinary
salary earners choose to open current accounts in the bank in order
to invest elsewhere.
T-bonds have gained in popularity because of their low risk and
stable profit. Statistics reveal state T-bonds provide a return 27
percent higher than bank deposits over the same period. Other types
of investment bear a greater risk than state T-bonds, including
treasury bonds issued by good-credit enterprises.
Yet this also indicates that Chinese people still have fewer
investment channels. So far, people only have engaged in foreign
currency speculation, share trading, investment in stamps, and
state T-bonds.
State treasury bonds are in short supply while many enterprises
find it difficult to raise capital on the stock market. Domestic
economists have long urged the utilization of idle social capital
to inject vitality into enterprises with great potentials. Yet,
efforts in this regard are still largely lacking and there is less
public enthusiasm.
Eastern provinces have seen a distinctive drop in support for
treasury bonds for local economic development because of a
government shift in focus towards western regions. In 2001, the
Chinese government plans to issue 50 billion yuan of special
treasury bonds to be used mainly to support implementation of the
strategy of large-scale development of the country's west. To
maintain a strong investment momentum, eastern China has to compete
harder for the idle funds now being channeled in large quantities
elsewhere.
(china.org.cn 06/05/2001)
