Business

Techies Are Trying to Get Chinese Consumers to Rack Up Debt

Vendors browse their smartphones as they wait for customer at their store selling Chinese made souvenirs at the Wangfujing shopping district in Beijing, China Thursday, May 21, 2015. Manufacturing in China shrank for the third straight month in May as demand remained soft, raising the chances of more stimulus to prop up growth in the world's No. 2 economy. (AP Photo/Andy Wong)
Vendors browse their smartphones as they wait for customer at their store selling Chinese made souvenirs at the Wangfujing shopping district in Beijing, China Thursday, May 21, 2015. (AP Photo/Andy Wong)

 

(Wired) – One major drain on the American economy is the glut of consumer debt. In China, it’s the opposite.

The Chinese are notoriously savvy savers, with a gross national savings rate of about 51 percent, according to the World Bank. In the US, it hovers around 17 percent. Saving is valuable, of course. But in recent years, as the growth of the Chinese economy has slowed—thanks to declining demand for exports and new real estate projects—the government has been desperate to get its thrifty citizens to spend, spend, spend and drive economic growth from within.

The problem is the nation of savers doesn’t have a long history of consumer credit. According to a report by The University of Chicago’s Paulson Institute, Chinese households borrow around 32 percent of their household income in a given year, compared to US households, which borrow 81 percent. And because China doesn’t have a long history of consumer credit, lenders don’t have a lot of data like credit scores to help them gauge the trustworthiness of potential borrowers.

“If you’re trying to build a broader credit infrastructure you need credit transactions. But if you don’t have a broader credit infrastructure, you can’t have credit transactions. It’s a vicious cycle,” says Douglas Merrill, CEO of online lender ZestFinance.

READ MORE

Tags
Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *


By submitting this form, you are consenting to receive marketing emails from: Washington Informer Newspaper, 3117 Martin Luther King Jr. Ave SE, Washington, DC, 20032, http://www.washingtoninformer.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Back to top button

Subscribe today for free and be the first to have news and information delivered directly to your inbox.


By submitting this form, you are consenting to receive marketing emails from: Washington Informer Newspaper, 3117 Martin Luther King Jr. Ave SE, Washington, DC, 20032, http://www.washingtoninformer.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker