Consumers Unlikely to Rescue China’s Sputtering Economy

Economists, inside China and outside, point to consumer spending on an expanding services for economic growth. But that requires borrowing and Chinese consumers may balk at taking on more debt, explains economist Huang Zhilong for Caixin. Huang points out that Chinese household debt is already at historic highs and consumers lacking official urban residence permits loan may struggle with loan requirements. Climbing housing prices limit disposable income, and many consumers make do with smaller spaces rather than invest more in housing. “Chinese are also less likely than many western peers to borrow and spend because the nation's social security system is far less developed,” Huang explains, adding that Chinese typically must cover half of their medical costs and pension funds don’t keep pace with inflation. The conclusion: “Chinese consumers more anxious about the future than ever.” - YaleGlobal

Consumers Unlikely to Rescue China's Sputtering Economy

Many of China's consumers are already heavily in debt and worried about the future, making them unlikely saviors for the nation's slowing economy
Huang Zhilong
Tuesday, August 2, 2016

Huang Zhilong is the director of the Macroeconomics Research Center at Suning Commerce and a senior researcher at the center.

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