China\'s bank deposits fall as investors sell yuan

Chinese investors withdrew hundreds of billions of yuan from major banks in the first 10 days of December, state media said Friday, on falling expectations the currency will strengthen. Deposits fell 400 billion yuan ($62.8 billion) as the unit comes under the biggest selling pressure since the 2008 global downturn, with a slowing domestic economy and turmoil in Europe and the United States fuelling demand for the US dollar. Half of the withdrawals were from the Bank of China, which has the largest foreign exchange business, the 21st Century Business Herald said, citing unidentified sources. Other banks affected were the Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China, the report said. Depositors may be withdrawing funds because they no longer expect the yuan to appreciate strongly next year, it said. Export-dependent China tightly controls the value of the currency, which critics say gives the country\'s manufacturers an unfair trade advantage by making their products artificially cheap. As demand for Chinese shipments weakens, policymakers are expected to prevent a strong appreciation in the yuan to avoid a collapse in exports and widespread job losses in the manufacturing sector, a key engine of growth. The yuan has touched the lowest point its tight trading band in 11 of the past 12 trading sessions as investors bought dollars and domestic exporters hoarded their greenbacks rather than exchange them for yuan. The central bank has responded by setting the central parity rate, the daily midpoint of the yuan\'s allowed trading band, at a stronger rate than the weakest level of the previous day, in an apparent effort to stop the unit depreciating too quickly and deflect criticism from trade partners. The yuan is allowed to trade 0.5 percent on either side of the midpoint. Currencies of emerging economies have been under pressure as investors worried about the downturn in Europe and the United States buy US dollars, which are considered a safe haven during economic uncertainty.