|Marcel Woo |||Feb 13, 2015 09:18 AM EST|
A sign with a logo of MasterCard is seen on the door of a shoe shop. REUTERS/Eduard Korniyenko
Credit card bills that were not paid in China as of last year reached 35.8 billion Chinese yuan (about US$6.2 billion), an increase of 42 percent from a year ago, data released by the People's Bank of China (PBOC) showed.
The data also showed that credit card bills that remained unpaid for at least six months rose to 10.6 billion Chinese yuan, or about US$1.69 billion in 2014, from the previous year, bringing the total unpaid credit card tab to about US$6.2 billion.
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Among those who still have not paid their credit card bill is 30-year-old Chen, who claimed that his bills piled up when he got hooked to online shopping.
"I bought several items online, small items at first then soon expensive ones. I spent more than what I was earning and now I could no longer pay my credit card debts," Chen told a local newspaper.
The mounting credit card arrears add to the rising financial risks in China as the country's economy slows to a 24-year low, Reuters reported.
Debt defaults have spiked in China as its economy stutters under anaemic export sales, a slowing property market and weakening investment growth.
Last January, data released by the government showed that the bad debt ratio of Chinese lenders rose to a five-year high of 1.6 percent at the end of last year.
Regulators said the rise in bad debt ratio has become a source of stress for banks in China.
The financial sector also saw a spate of defaults, especially among wealth management products.
Earlier this month, CITIC Securities, China's top brokerage, consulted lawyers about repayment from one of its wealth management products that is in danger of default.
Two Chinese fund management companies also defaulted in August 2014 after experiencing repayment problems with some of their wealth management products.
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