Beijing has spent the better part of two years telling its banks to lend more and its citizens to spend more. The citizens, it turns out, have a different plan: defaulting on the loans they already have.
Non-performing household debt in China has surged to at least 2.22 trillion yuan, roughly $324.5 billion to $329 billion. That figure represents an increase of over 21% year-on-year and amounts to about 1.6% of GDP.
A hundred million borrowers underwater
Approximately 100 million consumers are now caught up in loan defaults, which works out to nearly 10.6% of China’s entire adult population.
Take Jack Chen, a 27-year-old worker in Jiangsu province. He’s sitting on about 140,000 yuan, approximately $20,685, in defaults spread across various loans. The cause isn’t reckless spending. It’s income reductions, the kind of quiet financial erosion that doesn’t make headlines but hollows out household balance sheets.
