Nov 06, 2018 05:41 PM

Chart of the Day: China’s Growing Household Debt

China’s household debt has built up rapidly over the past decade as its gross domestic product (GDP) has surged. The country’s household-debt-to-GDP ratio increased from 17.9% in 2008 to 49% at the end of 2017, according to the 2018 financial stability report published by the People’s Bank of China.

In the report, the central bank said that policymakers need to keep a close eye on the country’s rapidly increasing household debt. However, China’s overall household debt doesn’t stand out when compared with that of other countries.


Graphic: Gao Baiyu/Caixin

China’s household-debt-to-GDP stood at 49% at the end of 2017, below the international average, but higher than the average of emerging economies. The figure is less than the household-debt levels of France and Japan and way below the levels of the U.S., the U.K. and Australia.

According to the International Monetary Fund (IMF), rising household debt can boost a country’s economy, provided that it is low to begin with. However, the economic juicing power of debt diminishes as it grows as a proportion of GDP.

An economy benefits the most from rising debt when its household-debt-to-GDP ratio is under 10%, according to the IMF. When it hits 30%, it can interfere with the country’s medium-term economic growth. Above 65%, it begins to undermine financial stability.

Contact reporter Charlotte Yang (

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