With temptations to consume but little financial savvy, young Chinese fall prey to online lending platforms
“When I wake up every morning, the first thing that comes to my mind is the debt I still owe,” says Wang Jun, a 23-year-old who works in an internet cafe in Chizhou, central China’s Anhui province.
The middle school graduate has to commute 43 kilometers into the city to work each day, but he had no choice but to take the job, if only so his nerves wouldn’t be stretched every time the phone rings. “It often turns out to be the collectors, who threaten to call everyone in my contact list unless I repay my debts immediately.”
Wang discovered consumer loans in 2015, the same year Ant Financial Group launched Huabei, a virtual credit card service that now counts over 300 million users nationwide. After taking loans from Huabei and a dozen other online lending platforms, he racked up an outstanding balance of nearly 80,000 RMB, of which he has paid back just 25 percent over the past six years.
Most of the money Wang borrowed was spent on meals, hobbies, and shopping sprees—though later, he started taking out loans from one platform to pay the balance on another. “It’s very tempting to use services like Huabei when you have no money to spend. They allow you to get money quickly without checking up on your financial situation,” he says.
The proliferation in recent years of easy-access online lending platforms has introduced a growing number of Chinese consumers to the joy of buying on credit—and the despair of living with debt. As of January 2019, Chinese have collectively racked up an outstanding balance of 9.3 trillion RMB (about 1.4 trillion USD) in consumer loans, excluding mortgages and auto loans. This is almost triple the 3.5 trillion RMB (563.1 billion USD) they owed in January 2015.
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Young and in Debt is a story from our issue, “Dawn of the Debt.” To read the entire issue, become a subscriber and receive the full magazine.
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