Chinese households are increasingly reallocating their wealth away from traditional real estate and bank deposits toward more lucrative investment opportunities both domestically and abroad, according to a recent report by Moody’s Ratings. The shift comes amid a sustained downturn in the property market and persistently low deposit interest rates within China.
The report highlights that since 2020, China has been reducing its benchmark one-year loan prime rate in response to slowing economic growth, a weakened property sector, and ongoing disruptions caused by the Covid-19 pandemic. These factors have collectively diminished the appeal of homeownership and led to a decline in deposit rates offered by domestic banks. As of the end of 2022, real estate still accounted for nearly half (47 percent) of Chinese household assets, while bank deposits represented about a quarter (25 percent).
Moody’s noted robust growth in alternative financial products, estimating that the outstanding balance of Chinese financial products increased by 13.9 percent in 2024 and is projected to rise 15.5 percent in 2025. In contrast, retail bank deposits grew more slowly, by 10.4 percent in 2024 and 9.7 percent last year. Instruments such as wealth management products, mutual funds, and insurance policies have experienced rapid adoption as investors seek higher returns with relatively low risk.
Despite intensified government scrutiny over offshore investments—including stricter enforcement of a 20 percent capital gains tax on such assets—Moody’s said demand for overseas investments is unlikely to wane. Financial institutions have implemented more rigorous procedures to vet Chinese investors, which may temper the growth rate of offshore holdings in the near term. Nonetheless, the agency emphasized that offshore investments continue to offer a significant yield advantage compared with domestic alternatives.
Hong Kong remains a key hub attracting mainland Chinese investment, benefiting from regulatory frameworks such as the Stock Connect and Wealth Management Connect programs. These initiatives provide regulated access for mainland investors to trade stocks and exchange-traded funds in Hong Kong. Data from Hong Kong Exchanges and Clearing revealed that southbound Stock Connect daily turnover more than doubled to HK$121.1 billion in 2025, up from HK$48.2 billion in 2024.
Moreover, sales of non-exchange-traded investment products, including pooled investment funds, surged by 40 percent in 2024 and 63 percent in 2025, according to a joint survey conducted by the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission. The HKMA attributed the expansion in Hong Kong’s asset and wealth management sector largely to increased participation from high-net-worth investors across the Asia-Pacific region, with mainland China as a notable contributor.
The Moody’s report concludes that demand for offshore assets has grown materially, driven by Chinese investors’ pursuit of better returns amid challenging economic and financial market conditions at home.