While bank deposits remain the most popular place for Chinese to park their money, the People’s Bank of China survey found funds accounted for 16.7 percent of residents’ financial assets in the first quarter of the year.

That figure was up 6.7 percentage points from the previous quarter and the highest since the central bank began its three-monthly surveys in 2004, according to the China Daily newspaper.

In the latest survey of 20,000 residents in 50 cities, a record 30.3 percent of respondents thought buying shares and funds was the most lucrative investment, up 11.7 percentage points from three months earlier. Chinese households have traditionally kept most of their money in bank savings, which hit 16.2 trillion yuan (US$2.1 trillion) by the end of 2006.

Nearly 60 percent of respondents in the survey reported bank deposits remained their most important financial assets. However, sentiment was turning, partly because the real interest rate was actually negative when taking into account rising inflation and a 20 percent tax on interest payments, the China Daily said.

The current benchmark one-year bank deposit rate is 2.79 percent after a 0.27 percentage point rise two weeks ago, while the consumer price index, a key indicator of inflation, stood at 2.7 percent in February. Meanwhile, China’s stock markets have continued to roar ahead in 2007.

The Shanghai Composite Index closed at a record 3,197.53 points on Thursday, extending this year’s gains to 19.5 percent after soaring 130 percent in 2006.

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