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Could Rising Household Debt Undercut China’s Economy?

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Abstract

Although there has been a notable deceleration in the pace of credit growth recently, the run-up in debt in China has been eye-popping, accounting for more than 60 percent of all new credit created globally over the past ten years. Rising nonfinancial sector debt was driven initially by an increase in corporate borrowing, which surged in 2009 in response to the global financial crisis. The most recent leg of China’s credit boom has been due to an important shift toward household lending. To better understand the rise in household debt in China and its implications for financial stability and China’s economic performance, it is important to examine the expansion in household credit, how the rise in debt compares to international experience, and the associated risks.

Suggested Citation

  • Hunter L. Clark & Jeffrey B. Dawson, 2019. "Could Rising Household Debt Undercut China’s Economy?," Liberty Street Economics 20190213, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87313
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    Cited by:

    1. Hunter L. Clark & Jeffrey B. Dawson & Maxim L. Pinkovskiy, 2020. "How Stable Is China’s Growth? Shedding Light on Sparse Data," Economic Policy Review, Federal Reserve Bank of New York, vol. 26(4), pages 1-38, October.

    More about this item

    Keywords

    bank credit; China; household debt;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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