In a report by Epoch Times on July 19, 2026, it was highlighted that as consumer spending in China remains sluggish, the total amount of non-performing consumer loans has reached a record high. Industry experts suggest that financial institutions in China may need to address non-performing loans amounting to 2 to 3 trillion Chinese yuan annually.
According to a report by Reuters on July 16, defaults on consumer loans in China have surged to historic highs. This trend is occurring against the backdrop of a weak job market and ongoing crisis in the real estate industry, which is undermining people’s ability to repay their debts. For instance, 27-year-old telecommunications network maintenance worker Jack Chen from Jiangsu Province has seen his debt burden increase to around 140,000 yuan, equivalent to nearly a year’s income, after his company cut salaries and eliminated fuel subsidies earlier this year. Despite cutting back on expenses to only cover basic necessities such as food, rent, and fuel, his debt continues to escalate.
Incomplete statistics from mainland media indicate that in the first half of 2026, a total of 24 licensed consumer finance companies in China had 122 non-performing asset packages on record, with outstanding principal and interest exceeding 50 billion yuan, representing a significant increase of over 70% from the same period in 2025. In terms of participation, nearly 80% of the 31 licensed consumer finance institutions in China have entered the market for bulk transfers, compared to only 15 companies during the same period last year.
Citing research from Gavekal Dragonomics, Bloomberg reported that based on analysis of the financial reports of 26 listed banks in China and other data, as of the end of 2025, the scale of non-performing household loans in China had reached 2.22 trillion yuan, marking a 21% increase from the previous year and hitting a record high. Approximately 100 million adults in China are experiencing debt overdue or default.
Financial analysts in China, such as Zhang Xiaoxi from Dragonomics, express concerns that the issue of non-performing loans is likely to worsen further unless the government adopts more proactive policies to alleviate income pressure and economic tension, as the situation is unlikely to improve otherwise.
Zhengjiang University’s Institute of Finance projects that Chinese financial institutions may need to address non-performing loans totaling up to 2 to 3 trillion yuan annually.
Reports from Reuters suggest that the Chinese authorities are attempting to stimulate consumer spending in areas such as automotive, home renovation, and electronics. However, the increasing amount of non-performing loans is undercutting the effectiveness of these policies. Official data released recently shows a significant decline in retail sales since the pandemic, a worrisome sign for the Chinese economy. TS Lombard’s senior economist Minxiong Liao analyzes that the primary issue with Chinese consumption lies not in the availability of credit, but in whether household income growth and social security networks are robust.
Chinese media revealed that “Bank of China Consumer Finance” under China Bank topped the industry with a listing scale of 33 projects amounting to 11.744 billion yuan; “CMBC Consumer Finance” jointly established by China Mobile and China Merchants Bank followed closely behind with a total scale of 10 projects amounting to 10.629 billion yuan; and “Ant Consumer Finance” from Ant Group ranked third with 6.478 billion yuan. Other consumer finance companies also had listing scales exceeding 2 billion yuan.
Individuals from asset management companies handling non-performing asset packages disclose that risks in consumer finance have been rapidly rising. “In the past, only a few large banks were involved in consumer finance, but now almost every bank is considering disposal plans. In the first half of this year, the number of consumer finance institutions we engaged with was greater than the entire previous year, and everyone is in consensus to accelerate the clearance of existing risks.”