China’s state-owned banks cut deposit rates to boost consumption, but impact on savings and consumption varies.

2/4
Lower deposit rates may be justified, given low and negative inflation, but their impact on Chinese consumption is complex. On the one hand, they may encourage Chinese households to save less out of current income, although this depends on their saving targets.

— Michael Pettis (@michaelxpettis) December 22, 2023

4/4
The best way to redirect demand in the Chinese economy from investment to consumption is to increase the direct and indirect shares of GDP retained by ordinary households. Lower deposit rates may be necessary to save borrowers and the banks, but they don't help rebalancing.

— Michael Pettis (@michaelxpettis) December 22, 2023