SHANGHAI, July 23 -- DEPOSITORS do not need to pay tax on interest earned in savings accounts before October 31, 1999, China News Securities said today, citing a new policy unveiled by China's central bank.

The People's Bank of China announced on Friday it would cut the tax on savings interest from 20 percent to five percent starting on August 15.

It also clarified the tax policy from the past during the weekend.

The central bank said savings deposited from November 1, 1999 to August 14, 2007 are still levied the 20-percent tax, the report said.

The five percent tax on interest will take effect from August 15, 2007.

The tax cut is aimed at increasing bank deposits and making bank savings more attractive than investing in the booming stock market.

The central bank also announced the third interest-rate rise this year on Friday, one day after the country's statistics bureau announced the fastest economic growth in 11 years and the highest inflation since October 2004.

From Saturday, the one-year benchmark lending rate was raised to 6.84 percent from 6.57 percent, and the one-year deposit rate gains from 3.06 percent to 3.33 percent.