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China’s economic stimulus
EconomyChina Economy

Why China is struggling to convince consumers to borrow: ‘I’m not attracted’

Beijing is offering easier access to credit in a bid to boost consumption, but households are reluctant to take on debt amid a global trade war

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China has introduced a slew of measures in recent months to encourage consumers to open their wallets, but many households remain reluctant to spend amid an economic slowdown. Photo: Reuters
Mandy Zuoin Shanghai
China has launched a series of policies aimed at boosting domestic consumption in recent months as officials look to shore up the economy amid an intensifying trade war with the United States. This miniseries examines whether those efforts are paying off, with the second story exploring China’s moves to ease credit restrictions. The first story can be read here.

Eric Liu, who works a white-collar job in Shanghai, is no stranger to consumer loans. The 30-year-old is currently paying in instalments for an iPhone 16 Pro, and previously used a similar plan to buy another smartphone for his family.

However, Liu is only willing to borrow if the lender offers interest-free terms. So, when he heard a week ago that Chinese banks were making it easier to take out consumer loans by raising limits and extending repayment periods, he was unmoved.

“I’m not attracted because of the interest burden,” he said. “I wouldn’t take out a loan just to make a large purchase.”

Many Chinese consumers share Liu’s cautious attitude towards spending amid the current economic slowdown, which could pose a problem for Beijing as it tries to stimulate consumption by relaxing consumer finance policies.

Earlier this month, China’s financial regulators announced an easing of its restrictions on consumer loans, raising the maximum loan from 300,000 yuan (US$41,300) to 500,000 yuan and extending repayment periods from five years to seven.

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