China’s household debt has grown so much that trade war stimulus is largely ineffective, study shows
- Chinese consumer debt-to-income ratio rose to 92 per cent at the end of last year, up from only 30 per cent in 2008, according to the Institute of International Finance
- The ratio is higher than the 86 per cent in Germany and close to the levels of 97 per cent in the United States and 100 per cent in Japan
China’s household debt has risen to a such a high level that government stimulus designed to boost consumer spending would likely be ineffective, an international research group said.
The country’s household debt-to-income ratio rose to 92 per cent at the end of last year, a sharp increase from only 30 per cent in 2008, the Washington-based Institute of International Finance (IIF) wrote in a research note.
The ratio is higher than the 86 per cent in Germany and close to the levels of 97 per cent in the United States and 100 per cent in Japan.
The debt level of Chinese consumers is high relative to household disposable income because Chinese households earn only 62 per cent of the total national income. In addition, “the burden of debt repayments is much higher for the young, urban, and low-income families”, they said.