Household debt in China, including short-term consumer credit, has risen quickly over the past two years, and has been closely linked to the surging property market. Consumer credit will probably continue to expand and contribute to household consumption in 2018, barring a sharp downturn in the real estate market. Authorities have simultaneously sought to encourage consumer lending and to control opaque consumer financing activities by banks and newer entities such as peer-to-peer (P2P) lenders. While the small size of outstanding household debt precludes macro risks, the speed of growth is concerning as Chinese banks have no history of managing consumer credit risk.
