Unpaid credit card debt in China has risen by a horrifying 126.5% from a year ago. Beijing should have known this very well as it was central government which instructed the banks to lend like crazy 12 months ago. As at the end of September 2009, there was 7.43bn yuan of credit card debt that was at least 6 months overdue. Mainland Chinese banks pushed those credit cards aggressively when Beijing "encouraged" the banks to be "easier with loans and credit disbursements". Beijing had encouraged banks to expand that line of business thinking that it would boost retail sales. Well, it may have had that effect, but they now also have a credit binge problem. The overdue amount represented 3.4% of total credit card debt.
The problem can get a lot worse because as it stands, the penetration rate in China for credit cards is only 0.13 cards per person now. Compare that to the US, a place where like New Zealand for sheep, there are 1.5bn cards for its 300m population - unbelievable, 5 cards for each person, including kids.
p/s photos: Marie Ann Umali