China to issue US$1.9b savings bonds
(Reuters)
Updated: 2006-06-26 10:57 China's Ministry of Finance said on Monday it
would issue the country's first ever savings bonds, worth up to 15 billion yuan
(US$1.9 billion), offering Chinese citizens a new investment option.
The tax-free three-year bonds, to be sold from July 1 to 15, would bear an
annual coupon of 3.14 percent, the ministry said in a statement published on its
Web site (www.mof.gov.cn).
The coupon compares with 3.24 percent for three-year fixed yuan deposits, but
interest from the savings bonds is not subject to the 20 percent income tax for
bank savings.
The non-tradable bonds would be sold through a pilot computer system linking
big commercial banks to allow individuals to purchase, manage and redeem the
forthcoming savings bonds electronically, the ministry said.
The banks involved were Bank of China Ltd. , China Construction Bank Corp. ,
Industrial and Commercial Bank of China [ICBC.UL], Agricultural Bank of China
[ABC.UL], Bank of Communications Co. Ltd. , China Merchants Bank Co. Ltd. and
Bank of Beijing, it said.
Chinese citizens hold $1.8 trillion yuan in bank deposits, due in part to an
underdeveloped social welfare system that pushes many to save for medical care
and old age.
But they are largely forbidden from investing outside China, and their
domestic options are limited to savings accounts and stock, bond and real estate
purchases.
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