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The
order Friday from the country’s financial regulator is part of
the ruling Communist Party's latest push to build more
confidence among consumers who are opting to save rather than
spend, worried over jobs and the outlook for the economy.
It said banks should lend more and also find ways to help
borrowers who run into difficulties. Share prices in China
surged following the notice from the National Financial
Regulatory Commission.
Officials are due to hold a briefing on Monday on efforts to
increase spending and investment, factors considered crucial for
keeping the economy on track following the setbacks of the
COVID-19 pandemic, when millions of people lost jobs and many
companies went out of business.
The Chinese economy, the world's second-largest, has been
growing recently at about a 5% pace, according to official
statistics. But worries over jobs and the burden of health care
and education have left many Chinese unwilling to spend much,
hobbling a major driver of business activity.
A prolonged downturn in the property market triggered by
government efforts to rein in excessive borrowing by real estate
developers has also weighed on consumer sentiment, leaving many
families feeling worse off than in the past.
Last year, a surge in exports helped to make up for the
persisting weakness in domestic demand, which is fueled by
spending and investment. But U.S. President Donald Trump's
orders to sharply raise tariffs on imports of Chinese goods may
dent exports in coming months, raising risks for many types of
businesses.
Apart from expanding use of consumer credit, the government is
spending tens of billions of dollars on car and appliance
trade-in programs meant to encourage use of more energy
efficient products, but also to soak up excess inventories due
to weak demand.
The level of consumer financing and other personal borrowing in
China has tended to be much lower than in the U.S. and many
other countries, although it has surged in recent years. Nearly
nine in 10 Chinese families own their homes, while fewer than
half of homeowners have mortgages.
Use of cash and online apps and other forms of digital payments
are more common than use of credit cards.
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