According to a February report that a Chinese research institute published, the country’s household debt ratio, which measures debt as a share of income, has climbed from less than 5 percent in 2000 to 62.2 percent at the end of last year, surpassing both Germany and neighboring Japan.
The report, that scholars at the government think tank, the Chinese Academy of Social Sciences, co-authored, points out that, “A sudden increase in household indebtedness will affect the stability of the fiscal system. High household debt largely triggered the global financial turmoil in 2008. In China, the risk of household debt is closely related to the real estate market, to the growth of income and to the growth and distribution of wealth.”
The authors also pointed to the very difficult problem for some households that do not have cash on hand to spend. Low-income workers, the self-employed and migrant workers are particularly vulnerable to the impact of the epidemic. The unstable income of these groups may lead to greater pressure on overall household debt.
Source: Central News Agency (Taiwan), April 19, 2022