Could China’s rising household debt threaten Beijing’s consumer-led growth vision?
- By the end of last year, China’s household debt as a percentage of disposable income had reached a record high of 130.9 per cent
- Servicing loan payments is eating up disposal income that could otherwise be used to buy goods and services to support the economy
This is the fourth part in a series of stories looking at China’s economic outlook in the second half of 2021 as it continues its recovery from a coronavirus-hit 2020.
Since May, Jane Zeng has had countless sleepless nights after her husband told her how deep the family was in debt.
Zeng’s husband has steadily taken out credit over the past few years, including a loan to purchase a 70-sq-metre three-bedroom flat and two condos in Shenzhen, and a second mortgage on their properties to finance other investments.
Although the properties’ total market value now exceeds 18 million yuan, their savings are down to 200,000 yuan (US$31,000) and they need 60,000 yuan per month just to repay bank loans of nearly 10 million yuan.
“Debts have hugely reduced our family’s quality of life,” said the housewife in her 40s. “Except for the tuition fees of our children’s international school, I’m trying my best to reduce our living expenses to within 5,000 yuan a month.
“The properties are appreciating, but I feel like we are walking a tightrope in mid-air, and I worry every day that we won’t have enough money to repay the mortgage next month.”
