LOCAL government officials in parts of northern China are putting intense pressure on rural residents to deposit their savings in state-run banks, according to economists in Beijing. Not content to rely solely on higher interest rates to attract investors back to the state sector, some local officials in the poor provinces of Shanxi, Shaanxi and Inner Mongolia have been telling people it is their ''patriotic duty'' to make substantial deposits at state-run banks. In several counties, local officials have threatened people with serious repercussions unless they comply, according to an economist who has just returned from Shanxi. ''They would say things like unless farmers handed over their savings, they were unlikely to receive payment for their crops this year,'' he said. ''Other officials laid down minimum deposits for local residents, some as high as 1,000 yuan [about HK$1,350 at the official rate].'' This kind of coercion, the economist said, was leading to considerable resentment in some rural communities burdened by heavy taxes and charges levied by the local government. ''Some local officials are being very heavy handed about this business and I can see some major problems developing unless this kind of activity is curtailed,'' he said. The Beijing Government has issued strict directives ordering local officials not to burden rural residents unfairly, but it has also ordered a nationwide bank savings campaign. Many local officials, analysts said, were being ''over-enthusiastic'' in their drive to increase bank deposits. ''This type of behaviour is typical of local officials' desire to please their superiors,'' a political analyst in Beijing said. It is not known how effective the forced savings drive has been so far. There may be a slight increase in savings, but distrust of the banking system felt by many rural residents will probably lead to quite substantial sums being held back. There has reportedly been a surge in bank deposits in Beijing, but yesterday's China Daily said this was the result of the 1.8 percentage point increase in interest rates at the weekend rather than pressure from the Government. The official English language newspaper noted, however, that all state-run banks had launched a campaign coinciding with the interest rate rise to persuade citizens to ''save with enthusiasm''. One-day deposits at the Beijing branch of the People's Construction Bank almost doubled on Monday to nearly nine million yuan, the paper reported. Daily deposits at China's largest savings bank, the Industrial and Commercial, rose by 17 million yuan to 61 million. However, the newspaper pointed out that these increased savings rates could only be sustained if inflation was held in check. Urban inflation for the first five months of this year reached nearly 17 per cent, according to official figures, while bank deposit rates are still about 11 per cent even after the interest rate rises. Should inflation continue to rise, economists say, people are bound to take their money out of the state system and look for a higher return on their investments elsewhere.
