Unpaid Chinese credit card bills leap 42 pct in 2014

Unpaid Chinese credit card bills leap 42 pct in 2014
Posed photo of local credit cards.

BEIJING - Credit card arrears in China leapt 42 per cent last year to 35.8 billion yuan (S$8.3 billion), central bank data showed, highlighting rising financial risks in the world's second-largest economy as growth cools to a 24-year old low.

Unpaid credit card bills that were outstanding for at least six months jumped 10.6 billion yuan last year compared with 2013, data from the People's Bank of China showed.

Debt defaults have spiked in China as its economy stutters under anaemic export sales, a slowing property market and weakening investment growth.

Government data showed in January that the bad debt ratio of Chinese banks climbed to a five-year high of 1.6 per cent at the end of 2014, a trend that the regulator said was a source of stress for banks.

There has also been a spate of defaults in the financial sector, especially among wealth management products.

China's top brokerage, CITIC Securities , said earlier this month it consulting lawyers about repayment from one of its wealth management products that is in danger of default.

Two Chinese fund management companies also defaulted in August 2014 after experiencing repayment problems with some of their wealth management products.

And investors have been further spooked by default fears around Chinese developer Kaisa Group after it missed a coupon payment on one of its bonds.

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