Jakarta –
Millions of Chinese citizens aged 18-59 years are blacklisted for failing to pay debts. The number of Chinese citizens who have failed to pay their debts has increased quite high compared to 2020.
According to the Financial Times, Wednesday (20/12/2023), in 2020 the number of Chinese citizens who failed to pay their debts was 5.7 million people, then rose to 8.54 million people or the equivalent of 1% of China’s workforce.
The increasing number of people who default on their debts has reduced Chinese consumer confidence. Under Chinese law, people who have been blacklisted for defaulting on debts are not allowed to carry out economic activities, including buying plane tickets and transactions from apps such as Alipay and WeChat Pay.
“The increasing number of people defaulting is not only due to cyclical problems, but also structural. The situation could possibly get worse,” said Hang Seng Bank of China chief economist Dan Wang.
This bad credit occurs because so many people take out loans. According to the National Institute for Finance and Development, China’s household debt has almost doubled in the last decade, to 64% of GDP this September.
This increase in debt is becoming increasingly uncontrollable because it is not accompanied by an increase in wages. The Bamboo Curtain country’s economy is experiencing a downturn.
China Merchants Bank said bad debts from credit cards that were 90 days past due had increased 26% in 2022 compared with the previous year. China Index Academy also reported that there were 584,000 seizures in the first 9 months of 2023. That number increased by almost a third from the previous year.
Life for blacklisted borrowers can be difficult as they have to face many state-imposed restrictions. Those who fail to pay their debts and their families are prohibited from working in the government, and are even prohibited from using toll roads.
As defaults increase, legal experts have proposed implementing rules on personal bankruptcy. This rule is considered important to be able to lighten everyone’s debt burden.
Unfortunately, this rule is difficult to implement due to the lack of transparency regarding each person’s personal finances. Most people consider financial matters to be private.
One example of someone who failed to pay was Jane Zhang, owner of an advertising company in Jiangxi Province. He failed to repay a personal loan from a bank and then decided to close his advertising business after losing his license from the local government department. He was blacklisted.
“The court said my life would return to normal if I paid off the debt. But how can I make money when I face so many restrictions?” Zhang said.
(fdl/fdl)
2023-12-20 07:55:35
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