China’s rising household debt a ‘major concern’ as government tries to boost consumption amid trade war

A household debt crisis may be brewing in China as the government tries to boost sluggish consumption amid a domestic economic slowdown and trade war with the United States.

China’s household debt had ballooned to 60.4 per cent of its gross domestic product (GDP) at the end of 2018, the People’s Bank of China (PBOC) said in its annual financial stability report last week.

And for the first time, the household debt to income ratio hit 99.9 per cent, meaning that total debt is now roughly equal to total household income among the average Chinese household.

“[Household debt growth] is a major concern for the central bank,” said Xia Le, chief economist for Asia at Spanish banking group BBVA. “Looking at the rate of growth of household debt or leverage, in just over two or three years, it’s already grown to a level where you can’t say it’s particularly safe or low. It may be becoming a financial risk.”

China’s central bank has warned against rapid growth of household debt, particularly in the form of mortgage and consumer loans. At the end of 2018, the housing loan to income ratio hit 47.7 per cent, up 3.7 per cent from 2017, according to the PBOC.

Besides housing loans, consumer lending has also skyrocketed. Fitch Ratings estimated that the outstanding balance of credit card receivables reached 7.23 trillion yuan (US$1 trillion) by the first half of this year, after a nearly 30 per cent compound annual growth rate over the past five years.

Signs that people are struggling to repay their credit card debt are also showing. Late payments on credit cards have been rising this year, while there was also an increase in the number of credit card loans that had soured at some banks during the first half of 2019

RE: I suggest that in order to boost our own economy and help our Chinese brothers and sisters maintain their standard of living we could enlist our own children at near-slave wages to manufacture billions of worthless plastic things and provide them to the Chinese at extremely low prices.

It is coming to a point where making cheap products via cheap labor is soon, not going to work in China. Labor costs are creeping up and there are OTHER countries that are competing with China. Vietnam, Cambodia, Bangladesh are just three off the top of mu head.

China has now adopted a two child per family policy. Will this help?

IMHO, Like all central planners and social-engineers, its a failed political move that was much too late. Again, like Japan, for over 30 years they have created a generation that has no brothers and sisters, was raised in economic prosperity, and with massive debt. Beyond the social factors of people preferring luxury, being trapped in entertainment and on-line, and young women preferring to have careers, Housing in major cities is a HUGE expense, as is education. Most young people feel they can't afford to have children.

Simple: As long as one cannot sustain their current “level of living” they need to lower it to live within their means. I’ve been there, done that! It worked for me.

In the USSA there are no poor and homeless - only statistical extremes (outliers). The lowest level being composed of individuals ranging from unemployed millionaires to unemployable grunts with no skills or experience and (dare I say it) possessors of useless college degrees. The highest levels are those who have benefited the most. Throw in a few mentality retarded, drug addicted, sexually confused, or whatever else to make it sadder. Add the lack of a desire to “do better” and viola, we have the “poor and homeless” of humanity and at the other extreme, the “rich” elite.

But somewhere in the middle are you and I. Call us the rest of humanity, maybe even “the majority”. We are struggling to survive and stay afloat. We are being pulled under by the raging river of change happening in our society today. True, we have chosen poorly in many ways to get to this point in our lives, but we are not sh*tting on the streets of San Francisco and poking needles in our arms. Despite our (deplorable) condition, we still have respect in ourselves and hope that we can improve our human condition. As so, we are the “survivors” of an ever changing society.

We acknowledge (historically) the tree of politics, religion, and economics to be ever changing, we know “bad” fruit happens. When we see it, we evaluate its affect upon our lives and care enough to react in our own best interests. We are being deceived with the lie “we are not to judge anyone, let alone ourselves”. Instead we should rely on our “superiors” to judge for us and direct our lives. Knowing everyone (to some degree) is a victim of the society in which they live, many are ready to blame their condition on something or someone else. Many have become sheeple afraid to face reality and so easy to let others do their thinking and make their decisions for them. We are becoming followers, not leaders. We are set to be replaced by robots and AI.

Historically, the humanly poor have been and will always remain with us. The best we can hope for is not to become one of them. In the meantime, wake up, face reality (we are not all equal and entitled as many would believe) and adjust to living within your means until you can improve your condition.

It is written: Owe no one anything, except to love each other, for the one who loves another has fulfilled the law. Good advise I believe.

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