Credit Card Defaults Jump 131% in China

The Shanghai Daily reports:

CREDIT card defaults in China in the second quarter more than doubled from a year earlier, but analysts said the risk for card issuers remains under control.

The value of credit card accounts in arrears six months or longer surged 131 percent to 5.77 billion yuan (US$845 million) as of the end of June, according to the People's Bank of China.

On a quarterly basis, defaults grew 16.2 percent.

"Credit card defaults grew in tandem with booming use of cards," said She Minhua, a Haitong Securities Co analyst. "However, the default rate in China is still low when compared with Western markets."

In China, defaults accounted for 3.1 percent of total outstanding credit card lending, up 0.7 percentage point from a year ago.

The figure in the United States, where plastic money originated, is about 7.5 percent.

"I think the default rate is still within control," She said. "We don't need to worry too much about it now."