China has ordered banks and other financial institutions that Foster consumer financing and the use of credit cards As part of a campaign to encourage people to spend more.
The order issued on Friday by the country’s financial regulator is part of the last effort of the ruling communist party to generate more confidence among consumers, who are choosing to save instead of spending, concerned about the employment and prospects of the economy.
It was indicated that banks should lend more and find ways to help borrowers who have difficulties. Chinese stock markets shot after the National Commission for Financial Regulation.
The authorities plan to offer a press conference on Monday about efforts to increase spending and investment, factors considered crucial to maintain the economy on the right track behind the setbacks of the Covid-19 pandemic, when millions of people lost their work and many companies closed.
The Chinese economy, the second largest in the world, has recently grown at a rate of approximately 5%, according to official statistics. But concern for employment and the burden of medical care and education have made many reluctant to spend, hindering an important engine of business activity.
The prolonged fall of the real estate market, caused by the government’s efforts to curb excessive indebtedness of promoters, has also affected consumer confidence, causing many families to sit in a worse situation than in the past.
Last year, the increase in exports helped compensate for the persistent weakness of domestic demand, which feeds on spending and investment. But the orders of the president of the United States, Donald Trump, of drastically increasing tariffs on imports of Chinese products could affect the exports of the Asian giant in the coming months, thus increasing the risk for many types of businesses.
In addition to expanding the use of consumer credit, the Government is investing tens of billions of dollars in car change and appliances that seek to promote the use of more efficient energy products, but also absorb excess inventories caused by the weakness of demand.
The level of consumer financing and other personal loans in China has tended to be much lower than in the United States and in many other countries, although it has increased in recent years. Almost nine out of ten Chinese families own their homes, while less than half of them have mortgages.
The use of cash and online applications and other forms of digital payment are more common than the use of credit cards.
Source: Ambito
