Chinese bank funding: another short account

I mentioned in a previous post that I think that understanding the methods of savings mobilisation in China and East Asia generally is important for understanding their growth and other people's potential growth. There's another account of the mobilisation on the World Bank website.

The description argues that although the bank sector is deep and wide in China, it has not been very important in growth because the Chinese state which owns most of the banks does not make loans for strictly profit based reasons, and many of them are badly performing. It points to data showing that in provinces where the banking sector is deep, growth is lower. This argument would seem to support the idea that it is internal savings which are funding corporate growth. The argument does raise the question of why people deposit in banks so much if they are that unprofitable - wouldn't it be more sensible to invest in companies?