This article from Netease Finance shows which provinces residents are more likely to renege on their personal debts.
The results are compiled from publicly available data, which can be found on this government website. Visitors can literally see a rolling list of bad debtor names and partial ID numbers, and can perform look-ups on each province. The system was set-up by the Supreme People’s Court in 2013, so the public can view those persons and legal entities facing legal proceedings for reneging on debt obligations.
This can only add to the public shame felt by many debtors in China, where consumer credit is less socially acceptable and less of a norm than in more developed countries (although this is slowly starting to change). Even the Chinese word used for these bad debtors 失信, translates literally as ‘lose confidence’.
Thus the authors of the article are keen to point out this compiled data is offered only as a guide to readers, and emphasise in no way should it be construed as discrimination against citizens in some areas.
Nonetheless the first map immediately puts North Eastern Chinese in a bad light, which won’t help their reputation in China. This map shows the bad debt in per capita amounts across China. Jilin takes first prize, followed by Tianjin, then Shanghai.
It’s not clear when the data was compiled, yet the figures would tie in with the recent sharp drop in GDP figures for North West China. Jilin might be particularly sensitive to the economic downturn owing to its capital Changchun acting as a regional manufacturing and industrial base.
An industry insider working for a foreign personal lender in China tells chiecon that “Jilin lending business has been significantly impacted by the coal industry downturn”. (See chiecon’s recent article on the coal industry). The same source also commented on Tianjin borrowers, but will leave this unpublished.
The second map, which shows the total amount of bad debt per province, appears to admonish the North East, instead the culprits this time are the East China coastal cities. Way out in the lead is Fujian (RMB 4.4 billion), followed by Zhejiang and Guangdong, each with around half that amount.
Given that the East China economies are inherently larger, the amounts of bad debt in absolute terms are more likely to be higher. Yet these figures are much higher than other provinces, possibly due to the coastal cities reliance on exports, which suffered post financial crisis, and higher levels of entrepreneurship.
Whilst the data differentiates in the legal sense between individuals and legal entities, this distinction is often blurred in Chinese business practice. For example it’s common to see businessmen having to put forward their own personal assets as collateral when raising finance for their businesses.
Map three shows the numbers of bad debtors per province. Again Fujian province is on top, having over ten thousand names on the bad debtor list. Guangdong and Jiangsu provinces are second and third with four thousand and three thousand names on the list respectively.
It’s certainly a positive to have a more transparent bad debtors system in place, but this won’t do much for the reputation of North East Chinese. This reputation was tarnished in the 1990’s when capital rich Southern Chinese companies rushed to invest in North East China, only to have their fingers burnt by local businesses and government.
It’s unfair that such regional stereotypes exist in China, yet the presence of North Eastern Chinese organised crime can be easily seen in many Chinese cities. Needless to say, if you are to pick a fight in China, don’t choose the North East, and that’s just the women!
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