China’s youthful, debt-driven spending frenzy triggers a reckoning


Chinese regulators trying to contain Ant Group Co. and a growing online lending industry are targeting one target: the excessive, debt-ridden lifestyle of the country’s youth.

A new generation of tech-savvy citizens who are keen to consume helped fuel rising consumption, a growing engine of the Chinese economy.

Many used short-term loans to pay for expenses such as prestige cosmetics, electronics, and expensive restaurant meals. Thanks to Ant and other Chinese financial technology companies who gave unsecured loans to millions of people without any bank-issued credit cards, they found loans easy to obtain. In 2019, according to Fitch Ratings estimates, online lending already accounted for half of all short-term consumer lending in China.

Now, new financial regulations are forcing lenders to rethink their business strategies and have sparked an American-style settlement on the borrowing and spending habits of the younger Chinese population. From 2022 Ant and Co. will have to finance at least 30% of the loans they jointly issue with banks Let online lenders take more risk.

In the past few weeks, a grassroots campaign on Chinese social media called “Landing” – a metaphor for debt-free – has gained momentum, with people sharing their experiences and regrets about spending and borrowing too much.


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