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China’s Rising Household Debt: A New Debt Trap?

Sarah Chan
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Sarah Chan: East Asian Institute, National University of Singapore

Economic Alternatives, 2020, issue 4, 567-578

Abstract: Household debt in China has risen rapidly in recent years, mostly driven by mortgages but also by ongoing financial deepening and liberalisation which facilitate economic rebalancing towards more consumption. Although the risks to financial stability do not seem large at the time of writing, the sharp rise in household debt has raised some concerns, as high household borrowing could increase macro-financial risks, particularly given the US-China trade tensions and the ongoing coronavirus pandemic that has resulted in weaker employment and export market. Rising household debt will add to medium- to long-term challenges for China’s domestic consumption and the financial sector. The authorities have so far implemented measures to lessen the risk of a sharp housing correction in the short-run.

Keywords: credit; China; Household debt; financial stability (search for similar items in EconPapers)
JEL-codes: D10 D14 E21 G21 G51 (search for similar items in EconPapers)
Date: 2020
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