E-Commerce a Key Driver of Consumer Credit Growth

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A new report indicates surging consumption in China is prompting sharp consumer credit expansion, with e-commerce serving as a key driver of growth.

According to the “2017 Consumer Finance Report” (2017年消费金融行业报告) over the past five year’s consumption has risen sharply, with the total value of retail consumption nearly doubling during the past five years.

During the period from 2011 – 2016 total retail consumption posted average annual growth of 10.3%, rising from 184 trillion yuan to 332 trillion yuan.

A leap in consumer credit has accompanied this skyrocketing consumption, with growth in consumer loans heavily outpacing growth in credit in general.

Data from China Merchants Securities indicates that as of the end of 2016 China’s consumer loan balance was approximately 5.4 trillion yuan, while the compound annual growth rate in consumer finance was 16.4% – far in excess of the figure for overall credit growth, which stood at 9.1%.

According to analysts consumer credit is set to continue growing as disposable incomes rise, and policymakers keep their hands off the sector given that leverage rates are still comparatively low.

The prevalence of e-commerce in China is also spurring rising consumption and attendant credit growth, especially amongst the country’s younger, net-savvy age cohorts.

Online purchasing has become the key means of obtaining consumer financing, accounting for 72.9% of the total.

 

 

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