After the new policy takes effect this week, the big five banks have all set their one year savings deposit rates at 3.5%, unchanged from before the move.

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Last year, the government began breaking up the local cartel in savings and time deposit rates, leading to increased competition for retail funds.

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But in China, where most savings are in the form of bank deposits and where earnings on savings are a significant portion of total household earnings, lowering deposit rates tends to increase the savings rate.

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ING, a Dutch financial-services group, began pushing a telephone-based savings account in May, offering higher interest rates than domestic deposit-takers.

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When faced with unexpected expenses, Ms. Chapman advises clients to dip first into the assets with the lowest rates of return, such as certificates of deposit or savings accounts.

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However, households in China will continue to suffer from artificially low deposit rates, which mean they earn very little return on their savings.

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Certificates of deposit (CDs) are an attractive option when trying to boost your savings yield because they pay more competitive rates than a saving account while still offering FDIC insurance protection.

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