A recent Goldman Sachs research report on China's household balance sheet outlines a structural transformation currently underway in household wealth. The report estimates that China's total household assets stand at approximately 73 trillion yuan, and after six consecutive quarters of decline, the total has stabilized and stopped falling.
But a bottoming out of the total does not equal a restart of an expansion cycle. The truly profound change is occurring within the internal structure of assets: real estate, long the ballast of household wealth, continues to see its weight decline, while financial assets are gradually stepping onto center stage.
In mid-2021, Chinese households held 67% of their assets in property, 16% in cash and deposits, and 15% in other financial assets. By the first quarter of 2026, the property share had fallen to 52%, deposits had risen to 25%, other financial assets had climbed to 20%, and the direct household equity holding ratio had edged up slightly to 6%.
It is worth viewing calmly, however, that a declining share does not mean households have already sold property en masse and rushed into the capital markets. Part of this reflects passive weight dilution caused by falling property valuations, and part reflects the reality that, as risk appetite contracts, households are prioritizing deposits to build a stronger safety cushion. At this stage, many families' first instinct is still to seek security rather than charge headlong into equity markets.
At the same time, the report cautions that the broad-based wealth effect of real estate will be difficult for financial assets to fully replace in a short period. Currently, more than 90% of households own property, yet only one-quarter of adults participate in stock market trading. Once housing prices weaken, consumer confidence across nearly all households is affected; by contrast, when the stock market rises, the dividend coverage is relatively narrow, concentrated mainly among those who have already entered the market. This means that even though the long-term direction of wealth allocation has shifted, the stabilization of the property market in core cities remains an important anchor for restoring confidence across society and stabilizing consumption expectations.
On the other side of this asset structure reshaping, the process of active deleveraging by the household sector is still ongoing. Mortgage loans and short-term consumer loan balances continue to contract, reflecting that many families are still prioritizing debt repayment and actively repairing their household balance sheets. From a macro perspective, China's household debt-to-GDP ratio is about 59%, which is not extreme compared with the United States and Japan. However, since household disposable income accounts for only about 45% of GDP, the household debt-to-disposable-income ratio works out to 140%. This set of data reveals a real dilemma: debt repayment pressure remains a hard constraint limiting a consumption rebound. Interest rate cuts and interest subsidies can provide some buffer, but monetary easing alone is not enough to quickly reverse households' debt-first behavior. A consumption recovery ultimately cannot bypass an improvement in household income expectations.
From a global perspective, compared with Western developed countries, the share of stocks and fund-type financial assets held by Chinese households still lags considerably. This gap did not form by accident. During the rapid urbanization process of the past two decades, housing prices rose continuously, and getting rich by buying property created a powerful social demonstration effect; real estate is tangible and visible, matching the ordinary public's demand for a sense of security. At the same time, China's capital market has a relatively short history and has experienced multiple boom-and-bust cycles, with ordinary retail investors repeatedly experiencing swings between profit and loss, which has also made many families wary of equity investment. Combined with a social security system that was still in a phase of continuous improvement, residents were more willing to use property and deposits as household risk buffers. Multiple factors together created the past household asset structure with real estate as the absolute center of gravity.
Now, urbanization is slowing, expectations for rising housing prices are weakening, and deposit rates continue to decline. Savings funds are naturally beginning to look for outlets with higher returns, and signs of deposits migrating have already appeared. But looking at the past histories of the United States and Japan, the migration from real estate to financial assets is destined to be a slow and uneven process. High-income groups tend to benefit first, and if institutional development cannot keep pace, the risk of wealth divergence should not be ignored.
This leads to the most core proposition: if in the future Chinese households are to continuously and proactively increase their allocation to stocks and funds, the most critical prerequisite is that the A-share market can deliver stable and relatively obvious investment returns over the long term. Large stockpiles of household funds will not spontaneously flow into the market on a massive scale simply because of policy guidance. Only when ordinary people genuinely earn long-term investment returns through funds and stocks, creating a positive wealth demonstration effect, can deposit migration move from a potential trend to a sustained reality.
And sustained, stable market returns do not come from nowhere. They require continuous refinement of a series of market rules, including listed company governance, dividend mechanisms, delisting systems, and investor protection. Capital market institutional development has a long road ahead.
Goldman Sachs forecasts that by 2035, Chinese households' stock allocation will rise to 11% and insurance to 10%. The premise for this forecast to hold does not lie in how low deposit rates are. It lies in whether listed companies can make dividends, buybacks, delisting, and governance into hard constraints, whether the equity proportion of medium- and long-term funds and the personal pension quota can truly be opened up, and whether the cost of fraud and class-action compensation can be put into practice.
Building channels is easy; building returns is hard. The day households dare to put money they will not need for three years into the market and do not need to check their accounts every day, the allocation ratio will truly rise. Until then, the money that moves out of deposits will still land first in wealth management products and insurance, and what the stock market gets is spillover, not the main force.
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