How will China's credit binge end?
Business Daily
BBC
4.4 • 816 Ratings
🗓️ 12 July 2019
⏱️ 17 minutes
🧾️ Download transcript
Summary
Hasty borrowing by Chinese consumers and corporates may leave the country's economy with a debt hangover.
That's the contention of independent China economist Andy Xie. Business Daily's Ed Butler asks him whether ordinary Chinese are carelessly running up huge debts without appreciating the consequences, and whether the rest of the world should be concerned.
And it's not just China. Most East Asian countries have seen a rapid rise in household debts in recent years. Among them is Vietnam, where journalist Lien Hoang of Bloomberg BNA explains that it is in large part a bi-product of the government's policy to introduce its citizens to the wonders of online banking.
(Picture: Chinese woman holding phone and credit card; Credit: RyanKing999/Getty Images)
Transcript
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| 0:00.0 | Hello there, I'm Ed Butler. Welcome to Business Daily from the BBC. Coming up, the debt pile that's growing ever higher in Asia. |
| 0:09.7 | Credit is definitely on the rise in Vietnam. You know, if you're passing by an electronics shop, there are signs, advertising phones for zero percent interest loans. |
| 0:22.8 | Are Vietnamese and Chinese ready to handle the temptations of the consumer age? |
| 0:28.8 | The China dream for young people is to get a rich, quick dream. |
| 0:32.4 | If we get into a normal economy and no debt led growth and everybody needs to work for living. Lots of young people |
| 0:39.7 | don't believe in that. That's all to come in Business Daily from the BBC. |
| 0:46.5 | Is East Asia facing a climbing debt crisis? Yesterday on Business Daily we heard from a couple of |
| 0:53.5 | problem debtors in the United States, |
| 0:55.8 | but maybe it's in Asia where the biggest problems are currently presenting themselves. |
| 1:00.9 | Here are a couple of numbers for you. Consumer lending in China has trebled in just the last |
| 1:05.9 | decade. It now totals more than half of the nation's annual income. And it's even higher in neighbouring countries like Malaysia, Thailand and South Korea. |
| 1:14.4 | The problem here isn't just the levels of indebtedness, |
| 1:17.6 | but it's the speed of change and the question whether ordinary citizens are able to cope with the problems |
| 1:23.3 | that so much debt can sometimes lead to. |
| 1:25.7 | In 2014, I visited Vietnam. |
| 1:28.5 | There, in a rural community near the Cambodian border, |
| 1:31.7 | I met Fan Hu Lok, a 37-year-old former policeman |
| 1:35.4 | who'd become a moneylender. |
| 1:38.0 | Basing himself at the nearby casinos, |
| 1:40.4 | he'd cashed in on the vulnerabilities of local gamblers who came there. |
| 1:49.6 | Whoever ran out of money, people brought them to me so I could lend to them. |
| 1:53.8 | Usually it works like this. |
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