(Yicai Global) Nov. 8 -- Some CNY1.5 trillion (USD220 billion) sits idle among Chinese individuals, states a Tencent-backed report wealth management report, costing the would-be investors CNY57.3 billion (USD8.3 billion) in potential annual returns.
The joint report from Tencent’s wealth management platform Licaitong and Tencent Financial Technology found that Chinese individuals hold CNY1.7 trillion in “loose change,” which includes small-scale cash on hand, savings account balances, credit limits and third-party payment deposits among others.
Third-party payment platforms such as WeChat Pay and Alipay account for 91 percent of the “loose change” spending, the report found, adding that gifting money as virtual hongbaos or “red packets” in English, makes up close to two-thirds of the spending.
The report found that cash ranked first in only two of 16 daily spending scenarios, namely, street kiosk payments and public transport card top-ups. The most common means of payment for the other scenarios were third-party platforms.
The average number of non-cash payments made in first-tier cities is significantly higher than those in lower-level cities, especially in terms of mobile payments. Third-party platforms are used 3.7 times daily on average per person in the first-tier cities of Beijing, Shanghai, Shenzhen and Guangzhou, while the national average is 3.0.
The main reasons for funds sitting idle are a lack of significant benefits from smaller amounts saved and a lack of financial awareness in the market, the report stated.
Editor: William Clegg