The Hidden Debt Crisis: Chinese Residents' Burden

 The Hidden Debt Crisis: Chinese Residents' Burden

Last year, China's "12 trillion yuan debt-to-equity" plan sparked widespread attention, mainly aimed at addressing local governments' implicit debt risks. However, aside from local governments, many ordinary Chinese citizens are also deeply entangled in debt. China's resident leverage ratio has reached 65%, comparable to Japan's. This ratio reflects the proportion of resident debt to GDP, indicating a heavy debt burden on citizens.

Behind this phenomenon lies the fact that many families have borrowed heavily for housing, consumption, and other purposes, leading to an expanding debt scale. As economic growth slows and income growth is limited, residents' debt repayment pressure has intensified. For instance, in some cities, young people have taken on massive mortgages to buy homes, dedicating a large portion of their monthly salaries to loan repayments. This has resulted in a decline in living standards and severely suppressed consumer capacity.

The high resident leverage ratio not only affects family finances but also poses a threat to the healthy development of the entire economy. It can lead to decreased resident consumption willingness, impacting domestic demand and hindering the economy's virtuous cycle.

Therefore, while addressing local government debt issues, the problem of residents' debt relief cannot be ignored. Relevant policies should be introduced to help residents alleviate debt pressure and promote more stable and balanced economic development.