No more graveyard loans: Beijing wants everybody to quit bingeing on debt
In a statement yesterday, China's banking regulator urged more funding to coal mines and plants to tackle energy shortages, but also made an unrelated but important demand to reduce excessive loans. A few peculiar types of loans were specifically named, including “graveyard loans,” to pay for a deceased relative’s burial site.
The China Banking and Insurance Regulatory Commission requested yesterday that banks surge funding to coal mines and plants to tackle energy shortages. Also included was an unrelated but important demand:
- Consumers “shall not be induced to borrow blindly and consume excessively ahead of time,” and must only be allowed a limited number of credit cards.
- A few peculiar types of loans were specifically named: “graveyard loans,” to pay for a deceased relative’s burial site; “beauty loans,” where companies claim to require interviewees to get cosmetic surgery in order to qualify for the job; and “dowry loans.”
- All three of those are often linked to scams or have excessively high interest rates — especially beauty loans — and Beijing wants them to stop.
The takeaway: The government is keen to end the glory days of rampant borrowing. Evergrande is just a symptom; Beijing wants to target the underlying disease and change how people feel about debt.
