Domestic analysts foresee a boom in consumer finance in China, prompting an increasing number of financial institutions to apply for licenses from regulators.
A research report from Zhongtai Securiites forecasts that the transaction volume of China’s consumer finance market is on track to reach 10 trillion yuan by 2020.
A report from Changjiang Securities is similarly sanguine about the prospects of Chinese consumer finance, forecasting that “household consumption expenditures will reach 43 trillion yuan in 2020,” with “each percentage point rise in the household consumer debt ratio equal to several hundred billion yuan for the consumer finance market.
State-media has also recently reported that the Chinese central government is preparing a slew of policies to spur consumption in 2019, as investment growth slows and exports come under pressure.
Figures from the Ministry of Commerce indicate that consumption made a 78.5% contribution to Chinese economic growth in the first half of 2018, cementing its position as “the main growth driver for China’s economy.”
According to Time Weekly as of 28 December 2018 China was host to a total of 24 consumer finance companies that had either obtained licenses or already commenced operations, as compared to just three in 2010.
Leading online platforms such as news aggregator Toutiao, e-commerce hub Meituan, ride-hailing service Didi Chuxing, consumer electronics company Oppo and travel agency Ctrip all launched forays into consumer finance last year, while CITIC Consumer Finance and Xiamen Jinmei Consumer Finance (厦门金美信消费金融) obtained licenses in September 2018.
Time Weekly reports that at least ten more Chinese companies are currently waiting for their consumer finance licenses to be approved by central government regulators.