According to a sample survey report released by China's central bank on Wednesday, the amount of debt repayment of households in Beijing, Tianjin and Shanghai is close to an alarming level.
The report points out that the average household debt ratio in Shanghai, Beijing and Tianjin is 50 percent, 45 percent and 44 percent respectively, all close to the 55 percent warning limit set by China Banking Regulatory Commission.
Average household debt ratio refers to the ratio of monthly debt payment to disposable income. Among ten surveyed cities in China, Shanghai, Beijing and Tianjin recorded the highest average household debt ratio.
Mortgage loan is an important component of household debt in the above three cities. The survey finds that monthly mortgage payment comprises 42 percent of income of Shanghai households. The ratio is 42 percent in Beijing and 39 percent in Tianjin.
Experts suggest that in general, the ratio of installment to household income should be kept to around 28 percent to 35 percent. If it exceeds 35 percent, loan repayment will become difficult to bear. It will not only affect the quality of life in a household but also other items of consumption.
(China News Service June 2, 2006)
