Families in China borrowed RMB8.6tn in private loans: survey

Families in China borrowed RMB8.6tn in private loans: survey

Liang Shih-huang and Staff Reporter


According to the China Household Finance Survey conducted by the Southwestern University of Finance and Economics in Chengdu, some 33.5% of Chinese families have taken private loans totaling 8.6 trillion yuan (US$1.4 trillion). Half of these loans were used to buy houses, and people who made less money borrowed more in private loans. The survey was China’s first large-scale study of the financial situation in Chinese households. In 2011, the university began conducting a biennial nationwide survey, which involved household information, debts, income and expenditure.The results of the survey indicated that the rate of participation in the financial market among Chinese families was apparently low, at 13%. Some 8.8% of households had invested in the stock market, while 6.8% invested in funds. Some families took out loans to buy vehicles or support the education of a family member.

The survey also discovered that many medium and low-income households have relied on private loans to make ends meet. Households with lower incomes appear to have borrowed more in private loans. The figures also indicated that families had average assets worth 61,439 yuan (US$10,008) per household and an average debt of 60,959 yuan (US$9,930).

The survey noted that the low rate of participation in the financial market could be attributed to their lack of knowledge of financial markets, low income levels and savings, and the underdevelopment of the country’s financial market, which has failed to meet the needs of ordinary families.

Of the 8.6 trillion yuan (US$1.4 trillion) borrowed in the private lending market, 3.8 trillion (US$620 billion) was used to buy houses while another 3 trillion yuan (US$490 billion) was used for agricultural and industrial businesses.

The survey center stated that most families had resorted to the private lending market because they were unable to obtain loans from banks

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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