Credit consumption becomes new engine of growth

Credit consumption is turning into a new growth engine, as consumption contributed 60 percent of China's gross domestic product during the first six months of 2015, up 9.8 percentage points from the end of last year, said China Guangfa Bank Co Ltd in a report released on Thursday.

Wang Guizhi, vice-president of the mid-sized commercial lender based in Guangdong province, said at a news conference in Beijing: "As the Chinese economy entered a stage of 'new normal', a phrase describing the transition to slower but more sustainable growth, credit consumption has become a crucial driver for economic growth."

The credit consumption market in China has huge growth potential, expanding at an annual rate of 27 percent in recent years, the report said.

According to the China Banking Association, credit card transactions accounted for 58 percent of the total retail sales of consumer goods in China.

As of the end of June this year, major listed banks issued more than 433 million credit cards with the total credit reaching 6.4 trillion yuan ($1.01 trillion), up 25.6 percent from the previous year.

Credit consumption by Chinese residents has been on the rise since the first quarter of 2014. The average consumption per credit card this year is expected to go well beyond the figure last year, after it achieved double-digit growth annually over the past five years, the report said.

At present, China Guangfa Bank has issued more than 40 million credit cards. Its consumer credit exceeded 200 billion yuan and the average consumption per card reached 24,500 yuan.

Along with the growth in credit consumption, China's credit card debt that was overdue for six months also increased from 7.69 billion yuan in 2010 to 33.73 billion yuan in the first half of 2015. It will make risk control a major battlefield for various market players, according to the report.

Wang said: "The consumers raised their requirements on safety and privacy of credit consumption very quickly. At the same time, an increasing number of diversified players such as Internet and e-commerce companies are joining the market. Therefore, banks must develop their core competence and lead the financial sector in risk management and the application of big data."

Long Yu, assistant director of risk management and decision-making management at the credit card center of China Guangfa Bank, said the bank is using Internet-based data provided by third-party credit rating agencies, in addition to personal credit information obtained from the central bank, to build up a more accurate, multi-dimensional profile of the clients.