More Chinese Borrowing from Future to Pay for Present

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Last updated at: (Beijing Time) Friday, July 04, 2003

More Chinese Borrowing from Future to Pay for Present

As more and more young people are opting to purchase luxuries such as decent houses and cars on bank loans, the age-old tradition of saving for the future is disappearing in China.

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As more and more young people are opting to purchase luxuries such as decent houses and cars on bank loans, the age-old tradition of saving for the future is disappearing in China.

A survey conducted in Nanjing city, capital of east China's Jiangsu province, and released Thursday shows that 65 percent of the respondents are in favor of financing their consumption with bank loans and 18 percent have borrowed money from banks.

Nevertheless, 11 percent of the 300 sample families, whose members received higher education and ranged from 26 to 45 years in age, were against mortgaging their future for current enjoyment.

Chinese tradition values savings and frowns on any form of debt. It is essential for a Chinese to make both ends meet without borrowing.

Statistics from the Nanjing Branch of the People's Bank of China show a continual growth in personal bank loans in the first five months of this year. Private consumption loans issued by the bank branch totaled 21.981 billion yuan (about 2.66 billion US dollars) by the end of May. Housing loans amounted to nearly 70 percent of the total, up some 20 percent on a year-on-year basis.

Twentysix-year-old Liu Ning, who works in a Nanjing-based company with a monthly family income of 6,000 yuan (approximately 730 US dollars), borrowed 80,000 yuan (9,676 US dollars) and 20,000 yuan (2,418 US dollars) from local banks to purchase an apartment and a car respectively.

"Although I am far from affluent, I still enjoy spending my future income now," said Liu Ning.

The survey also showed that 60 percent of private bank loans issued in Nanjing ranged from 10,000 to 20,000 yuan (anywhere between 1,209 and 2,418 US dollars) and were mainly used to buy houses, cars and home electrical appliances as well as to finance education.

Prof. Huang Fanhua with the Business School of prestigious Nanjing University, said that China's two-decade long economic development had greatly changed consumption habits, especially among the younger generations.

The change would help to drive the country's economy, which wasstill shackled by insufficient market demand.

Moreover, Prof. Huang said the fact that an increasing number of people seek bank loans to finance major family expenditure epitomized the people's consumer confidence in a better economic future for Chinese society.

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