High time nation reduced its appetite for debt

Two recent announcements, both representing further uncharted financial territory for China, set off alarm bells for me.

In the first, we heard that a pilot consumer scheme that offers loans to low-income groups was being expanded. Private capital, domestic and foreign banking institutions and Internet companies are all being encouraged to set up consumer credit companies, and the approval procedures for these will be made easier, including no requirement for collateral. The administrative power to approve the new lenders and their approval procedures - previously controlled by the banking regulator - will be delegated to provincial governments.

The second revealed that credit card borrowing grew 35.5 percent during the first three months of the year and average credit lines jumped to 14,700 yuan ($2,400) from 12,300 yuan a year earlier.