The FT has an article by their Beijing correspondent, Simon Rabinovitch, saying that Chinese customers are getting angry about the big banks’ ever growing profits, which are in part at the expense of depositors who receive a negative real interest rate.
This may be so but it’s no better in the market-oriented west. The big British banks are not controlled by the British government (which has emergency stakes in a couple of them) but the very low interest rate policies of the Bank of England create the same outcome as in China – or worse.
The typical deposit rate on a basic savings account in the UK is 0.5%, while inflation in February was 3.4% (down from 3.6% the previous month). You can get up to 3.0% with online accounts, most of which limit the number of withdrawals. But you’re still losing in real terms.
In China the regulated deposit rate is 3.5% and inflation in February was 3.2%, down from 4.5% in January, so depositors are just in the black.
So financial repression – which is what economists call the process of extracting resources from households’ savings by keeping real interest rates down – is more effective in the UK than in China.