China’s banking watchdogs set sights on rising household debt problem

First they looked at local governments, then at major enterprises … now China’s financial watchdogs are focusing their sights on the debt problem facing the country’s households.

Guo Shuqing, chairman of the China Banking Regulatory Commission, and Pan Gongsheng, a deputy governor of the People’s Bank of China, both raised red flags this week on the sidelines of the annual gathering of the National People’s Congress in Beijing.

Guo said on Friday that curbing leverage levels held the key to tackling financial risk, one of President Xi Jinping’s top three priorities for the next three years.

But the problem was not just at the government or corporate level, he said. The steep rise in household debt was also a major concern that merited attention.

“There has been a rapid growth in household debt, [including] borrowing to fund consumer spending, property purchases and investments,” he said. “That’s very risky.”