China’s Household Debt Creeps Upward, Approaching Warning Line of International Monetary Fund
Chinese households have reported rising indebtedness while still trying to shake off the ghosts of uncertainties in jobs and incomes, contributing to the nation’s economic slowdown and raising questions about whether Beijing’s new consumption push can actually loosen up shoppers’ purse strings.
Analysts appear more worried about consumers’ genuine spending ability, as their income growth has lagged behind economic expansion and they become more inclined to save for mortgage payments, utility bills, childrearing and their own uncertain future.
The nation’s household debt reached 63.5 per cent of the national gross domestic product (GDP) in the second quarter, up from 61.9 per cent at the end of last year, according to a report by the National Institution for Finance and Development (NIFD) issued on July 23.
It is getting closer to the 65 per cent red line previously used by the International Monetary Fund as a warning point about financial risks.
China’s household debt is mainly in the form of mortgage loans, which reached 38.6 trillion yuan (US$5.38 trillion) by the end of June; as well as consumer goods loans, credit card debt, private borrowings, and loans used to fund business operations.
Source:South China Morning Post
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