‘Too easy to borrow’: debt plagues young people despite China’s scrutiny of fintech microloans
- As Beijing’s tough stance on online credit persuaded Big Tech firms to scale back their services, smaller platforms have proliferated
- Experts say online loans leave consumers vulnerable, as they can easily sign onto debt carrying high interest rates and unfair conditions
Gary Wang, 25, could not pay for all his purchases, but he kept buying anyway. The smartphones and clothes that appeared on the Chinese apps he used for watching short videos or ordering takeaways seemed too good to miss, and the platforms offered easy credit.
“It is a lot easier to borrow from platforms than acquaintances,” said Wang, a software tester living in the landlocked Hubei province, who earns a monthly income of 8,000 yuan (US$1,191).
By the time he realised he could not afford his lifestyle, he had already taken out 150,000 yuan in loans, mostly to dine out and cover his then-girlfriend’s expenses.
China has in recent years tried to rein in the nation’s online credit and consumer loan market, putting fintech businesses – including Ant Group, whose microcredit service once reached at least 350 million borrowers – under the same regulatory requirements as traditional banks. But the habit of “buy now, pay later” has nonetheless taken root among the younger generation.
(Ant Group is an affiliate of Alibaba Group Holding, owner of the South China Morning Post.)
“Online loan services basically took over every app you can access on your phone, so that you will think of them whenever you pay,” Wu Ying, a Guangzhou-based medical technician who only provided a pseudonym, said.
As Beijing’s tough stance on online credit persuaded many Big Tech firms to scale back their related operations, smaller services have proliferated. It is virtually impossible for the government to stamp out all of them because many are flying under the radar, according to analysts and consumers.
