Demand for consumer loans is picking up in China, especially among the less affluent, highlighting a group that some say could use more support during the coronavirus-induced economic downturn.
A survey of Chinese households in the first quarter found that the poorest — those making 50,000 yuan or less a year — reported the highest level of consumer loan demand. The corresponding index jumped to 110.5, up from 100 in the fourth quarter, according to the latest report from the Survey and Research Center for China Household Finance at the Southwestern University of Finance and Economics.
The coronavirus is changing payment methods, said Liu Meng, analyst and lead for Greater China digital financial services research at Forrester. He noted that because of budgeting pressure, more and more consumers may use fintech products to "buy now and pay later." "The low-income household have suffered the most," he said. "So based on that, we believe China needs a very large-scale, basically transfer policy, or subsidy policy, targeting relatively poor."
The central government's policy has focused on supporting businesses and preventing layoffs by cutting interest rates, taxes and social insurance contributions. In the last few weeks, many local governments have also issued consumption vouchers in an attempt to spur spending. He pointed out the problem now is not necessarily availability of capital, but expectations of future demand. "Some companies are not willing to keep on operating, because if they keep on operating, then they will lose money."
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