Core Viewpoint - The report from the Bank of China Research Institute indicates that more banks, particularly small and medium-sized banks, are expected to lower deposit interest rates in the last quarter of 2025, especially for medium- and long-term deposits [1] Group 1: Deposit Rate Changes - In the second quarter, the six major state-owned banks lowered their deposit rates, with the current deposit rate dropping to an unprecedented 0.05%, meaning a deposit of 10,000 yuan yields only 5 yuan in annual interest [3] - The one-year fixed deposit rate is now at 0.95%, while the three-year fixed deposit rate is only 1.25%, aligning with the zero-interest rate environment seen in developed economies [3] - Joint-stock banks have also joined the trend of lowering interest rates, with one-year fixed deposit rates around 1.15%, while some city commercial banks and provincial rural commercial banks have rates between 1% and 1.1% [4] Group 2: Comparison of Bank Rates - A table shows various banks' deposit rates, with state-owned banks offering rates of 0.95% for one-year fixed deposits and 1.25% for three-year fixed deposits, while some smaller banks still maintain higher rates [6] - Smaller banks like Shanghai Huari Bank have begun to lower their deposit rates, but their rates remain higher than those of the six major state-owned banks, with one-year fixed deposit rates at 1.5% and three-year rates at 2.3% [12] Group 3: Economic Context - The decline in deposit rates is attributed to banks' varying operational conditions and the need to lower costs in a competitive lending environment, particularly affecting smaller banks that rely heavily on interest rate spreads [7] - The People's Bank of China has not adjusted the benchmark deposit rates since July 2011, leading to a situation where the rates set by the six major banks effectively replace the central bank's rates [12] - The financial system's structural changes have resulted in deposit rates for major banks nearing zero, with current rates at 0.05% for current accounts and 0.9% for one-year fixed deposits [13]

Group 1 - The possibility of a zero interest rate era is discussed, with examples from Japan, the US, and Europe, raising the question of whether China could also experience this situation as its one-year interest rate is already below 1% [2] - China's economic downward pressure has been evident since 2012, with GDP growth rates declining from double digits, indicating a shift in economic dynamics, primarily due to insufficient domestic demand [2] - The reliance on external demand to supplement internal demand is diminishing, especially with the impact of trade wars, suggesting that the zero interest rate era may not be far off for China [2] Group 2 - In a potential zero interest rate era, individuals are advised to avoid risky investments, as overall asset values are expected to shrink, making a conservative investment approach more favorable [4] - The zero interest rate environment is often associated with economic depression, as seen during the Great Depression in the US, where unemployment surged, posing significant challenges for the middle class [4] - The focus should be on job security rather than maintaining dignity, as employment becomes the priority in a challenging economic landscape [4] Group 3 - The greatest pressure is on debt, with the need for balance sheet cleaning being more critical than merely lowering deposit rates, as seen in historical cases during financial crises [6] - The average wage level in society may decline significantly during a depression, leading to a situation where cash becomes more valuable compared to assets [8] - In a deflationary context, even with zero interest rates on deposits, holding cash may be a safer option as purchasing power could increase [8]