The number of debtors in China has risen to a record level since the beginning of the epidemic, revealing the depth of the economic decline in the country. writes about this Finance Times.
About 8.54 million people, or 1% of China’s working population, have been officially blacklisted for overdue loans and mortgages, according to local courts. This is almost one and a half times more than at the beginning of 2020.
Rising debt is making it difficult to revive consumer demand in the world’s second-largest economy. The publication also writes that in China there are no laws on bankruptcy of individuals that could alleviate the consequences of the debt crisis.
The “blacklist” imposes dozens of restrictions on debtors, including a ban on the use of mobile payments and the purchase of airline tickets. This slows consumption even further.
According to Hang Seng Bank China economist Dan Wang, China’s private debt crisis is both cyclical and structural. The situation may get worse before it gets better.
Over the past decade, China’s household debt has nearly doubled, reaching 64% of GDP. However, it became a heavy burden due to increasing liabilities, economic problems and falling incomes.
Before that the Chinese government promise reduce risks associated with regional debt.
Previously Chinese economists prohibited talk about the problems.