China must act to sort out its private debt which anyone who has spent any significant time there knows is out of control and is a huge threat. This isn't something that could just cause some issues or even a recession, this can implode the entire nation. Nobody knows just how bad it is, but some anecdotal evidence is shocking. I lived and worked there in the mid 2000's. None of the people I worked with had ever had access before to debt / credit. It just didn't exist. Then, all of a sudden, they had lots of it available. But no understanding of how to manage it. As a result, most of the people I knew had credit card debts with black banks many times their annual salary and when payments were due, would just get another card to make the payments with. They were not at all worried by this. Many now had 20+ credit cards. It is the same with housing. Have a look at the average costs for buying an apartment in Beijing and you see, that by any other world standard, they should be totally out of reach to all but the very rich. But, there not. People instead are taking mortgages which they have zero hope of paying back. Now, slot in a slowing economy and people losing jobs. Not a good mix...Interesting points. However, from my experience in Beijing most people save obsessively, and put down hefty deposits on apartments, something like 30%. I believe you can't get anywhere near a 90% mortgage in China. My old landlord (not rich) and his wife used to save scrupulously as private tour guides, they bought their two vehicles (needed for work) cash, and paid down a big deposit on an apartment on the outskirts of the city (cheaper) somewhere in the region of about £1-200,000. Not convenient as so far out, in the city centre it would be much more expensive. I think it tends to be the young and trendy with the credit cards, and their parents might help bail them out.
Access Investments-Building Awareness - European Union-ROMANIA
Tuesday, May 31, 2016
China must act to sort out its private debt which anyone who has spent any significant time there knows is out of control and is a huge threat. This isn't something that could just cause some issues or even a recession, this can implode the entire nation. Nobody knows just how bad it is, but some anecdotal evidence is shocking. I lived and worked there in the mid 2000's. None of the people I worked with had ever had access before to debt / credit. It just didn't exist. Then, all of a sudden, they had lots of it available. But no understanding of how to manage it. As a result, most of the people I knew had credit card debts with black banks many times their annual salary and when payments were due, would just get another card to make the payments with. They were not at all worried by this. Many now had 20+ credit cards. It is the same with housing. Have a look at the average costs for buying an apartment in Beijing and you see, that by any other world standard, they should be totally out of reach to all but the very rich. But, there not. People instead are taking mortgages which they have zero hope of paying back. Now, slot in a slowing economy and people losing jobs. Not a good mix...Interesting points. However, from my experience in Beijing most people save obsessively, and put down hefty deposits on apartments, something like 30%. I believe you can't get anywhere near a 90% mortgage in China. My old landlord (not rich) and his wife used to save scrupulously as private tour guides, they bought their two vehicles (needed for work) cash, and paid down a big deposit on an apartment on the outskirts of the city (cheaper) somewhere in the region of about £1-200,000. Not convenient as so far out, in the city centre it would be much more expensive. I think it tends to be the young and trendy with the credit cards, and their parents might help bail them out.
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