Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Chinese Credit Card Usage Growing Quickly

29.08.2012
Lack of knowledge of credit risks could create future problem

In the past two decades, the Chinese economy has undergone many drastic reforms in an effort to compete more effectively on the international market.

These reforms included allowing foreign banks to offer credit cards to Chinese citizens. Now, researchers at the University of Missouri have found about 30 percent of Chinese urban households now own at least one credit card and the growth rate of credit card adoption has been an average of 40 percent per year between 2004 and 2009.

Rui Yao, an assistant professor of personal financial planning in the College of Human Environmental Sciences at MU, says that this large growth in such a small amount of time has positive and negative implications for the Chinese economy.

“With more and more people taking advantage of credit in China, it certainly increases potential consumer buying power,” Yao said. “However, we found that more than 90 percent of non-credit card users were unaware of safety issues inherent in credit card use and more than 60 percent had little knowledge of the consequences of credit card default. This lack of knowledge could create problems as credit card ownership is expected to grow at a rate of 11 percent a year.”

Yao studied data from the 2008 Survey of Chinese Consumer Finance and Investor Education conducted by Tsinghua University in China and found that a large portion of new Chinese credit card holders are very young.

“We found that 58 percent of Chinese credit card holders are younger than 35, while only 3.3 percent of card holders are older than 50,” Yao said. “This result may reflect some unique aspects of the Chinese culture. The concepts of credit and debt are quite contrary to the principles of Confucianism, so it may take a while for older Chinese citizens to adopt those concepts.”

Yao found that while 72 percent of Chinese credit card holders were never late on their payments, only 55 percent were able to pay the full balance. She also found that 70 percent of Chinese credit card holders said that credit cards contributed to overspending.

Yao believes the Chinese could benefit from financial education designed to help them plan for their financial future in a manner consistent with Chinese cultural values. Yao believes encouraging the Chinese to take advantage of debt in a responsible fashion is important for the Chinese economy.

“Not using debt is a strength because it enables the Chinese economy to build a strong financial base that is not threatened by excessive amounts of consumer debt or subject to loss in uncertain financial times,” Yao said. “However, it may be a weakness if it limits consumption. Appropriate use of debt can help households improve their quality of life as well as spur economic growth through an increase in market purchases.”

This study was published in the Journal of Family and Economic Issues.

Nathan Hurst | EurekAlert!
Further information:
http://www.missouri.edu

More articles from Studies and Analyses:

nachricht A sudden drop in outdoor temperature increases the risk of respiratory infections
11.01.2017 | University of Gothenburg

nachricht Urbanization to convert 300,000 km2 of prime croplands
27.12.2016 | Mercator Research Institute on Global Commons and Climate Change (MCC) gGmbH

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: How gut bacteria can make us ill

HZI researchers decipher infection mechanisms of Yersinia and immune responses of the host

Yersiniae cause severe intestinal infections. Studies using Yersinia pseudotuberculosis as a model organism aim to elucidate the infection mechanisms of these...

Im Focus: Interfacial Superconductivity: Magnetic and superconducting order revealed simultaneously

Researchers from the University of Hamburg in Germany, in collaboration with colleagues from the University of Aarhus in Denmark, have synthesized a new superconducting material by growing a few layers of an antiferromagnetic transition-metal chalcogenide on a bismuth-based topological insulator, both being non-superconducting materials.

While superconductivity and magnetism are generally believed to be mutually exclusive, surprisingly, in this new material, superconducting correlations...

Im Focus: Studying fundamental particles in materials

Laser-driving of semimetals allows creating novel quasiparticle states within condensed matter systems and switching between different states on ultrafast time scales

Studying properties of fundamental particles in condensed matter systems is a promising approach to quantum field theory. Quasiparticles offer the opportunity...

Im Focus: Designing Architecture with Solar Building Envelopes

Among the general public, solar thermal energy is currently associated with dark blue, rectangular collectors on building roofs. Technologies are needed for aesthetically high quality architecture which offer the architect more room for manoeuvre when it comes to low- and plus-energy buildings. With the “ArKol” project, researchers at Fraunhofer ISE together with partners are currently developing two façade collectors for solar thermal energy generation, which permit a high degree of design flexibility: a strip collector for opaque façade sections and a solar thermal blind for transparent sections. The current state of the two developments will be presented at the BAU 2017 trade fair.

As part of the “ArKol – development of architecturally highly integrated façade collectors with heat pipes” project, Fraunhofer ISE together with its partners...

Im Focus: How to inflate a hardened concrete shell with a weight of 80 t

At TU Wien, an alternative for resource intensive formwork for the construction of concrete domes was developed. It is now used in a test dome for the Austrian Federal Railways Infrastructure (ÖBB Infrastruktur).

Concrete shells are efficient structures, but not very resource efficient. The formwork for the construction of concrete domes alone requires a high amount of...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

12V, 48V, high-voltage – trends in E/E automotive architecture

10.01.2017 | Event News

2nd Conference on Non-Textual Information on 10 and 11 May 2017 in Hannover

09.01.2017 | Event News

Nothing will happen without batteries making it happen!

05.01.2017 | Event News

 
Latest News

A big nano boost for solar cells

18.01.2017 | Power and Electrical Engineering

Glass's off-kilter harmonies

18.01.2017 | Materials Sciences

Toward a 'smart' patch that automatically delivers insulin when needed

18.01.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>