China’s debt-strapped consumer

CHINA ADVISORY - Report 14 Sep 2018 by Andrew Collier

Chinese consumption has been a major contributor to China’s GDP, adding an estimated 60% to GDP growth. In addition, the government increasingly has been turning to private capital, including savings from private citizens, to pay for infrastructure and other stimulus projects through bond sales, wealth management products, and securitization. Although retail sales have remained high over recent months, we believe the consumer is reaching the limit of affordability for additional consumption due to high debt levels, rising interest rates, and tighter financing in general. This could have a significant negative impact on both consumption and growth in general.

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