Young people in China have adopted the West’s fixation with payment cards — China Union Pay has overtaken Visa as the world’s biggest issuer of cards — but they are far more cautious in their approach.
Debit cards are far more common than credit cards, and credit cards are usually paid off before they incur interest charges.
Professor Steve Worthington at Monash University says this is because of an engrained cultural attitude in China, which includes a focus on saving and a sense of guilt associated with spending future money. He says the lack of a welfare net has played a large part in this, which raises an interesting question: if there was less welfare available in the West would we all start saving more?
In China the reluctance to spend beyond earnings will slow the potential rate of growth, but perhaps it will be more sustainable growth. Here in Australia there is a more cautious approach emerging. MasterCard claims that debit card purchases are increasing far faster than credit card spending — we’re also reducing the outstanding balances on our credit cards.
The young people of China must be smiling as they watch us struggle to pay off our debts, and think that their forebears were wise to teach them the value of money.