The number of credit cards issued by banks in China has seen an abrupt surge since the start of 2017 according to data from the Chinese central bank.
While 2016 saw the issuance of around 33 million credit cards, in 2017 a total of 123 million credit cards were issued by Chinese banks.
This momentum has continued since the start of 2018, with 50 million credit cards issued in the first half alone.
In the first half of 2018 China Merchants bank issued 14.21 million credit cards, for a YoY increase of 121%, while ICBC issued 13 million, for a YoY rise of 44%.
Ping An, China CITIC Bank, and China Everbright issued 9.17 million, 8.63 million and 6.046 million new credit cards respectively, for YoY gains of 81%, 104% and 61.7%.
The People’s Bank of China’s (PBOC) “Payments System General Operating Information” (支付体系运行总体情况) indicates that as of the end of June 2018 the per capita number of credit cards in China was 0.46, for a total credit amount of 13.98 trillion yuan, or a 6.40% increase compared to the preceding period.
Domestic analysts point out that surge in credit card issuance is primarily due to shifting risk and asset allocation preferences amongst the banks as a result of cyclical economic factors.
While the period from 2015 – 2016 saw a large volume of residential mortgages, since 2017 Chinese banks have been more inclined to provide consumer credit, leading to a “great leap forward” in credit card operations.
Consumer credit is also set to further increase in the wake of central government policies to drive domestic demand, as Sino-US trade tensions cast a pall over China’s economic growth.
According to data form the National Bureau of Statistics the contribution made by end consumption payments to economic growth was 78% for the first three months of 2018.
Another key factor behind the “great leap forward” in credit card issuance was the release of the “Notice Concerning matters in Relation to Credit Card Operations” by PBOC, which came into effect on 1 January 2017.
The Notice gave Chinese banks the right to independently determine credit card rates, minimum repay mount amounts, interest-free periods and overdraft interest rates.