April 26 (Xinhua) -- Chinese people's traditional buying habits and the country's backward credit system continue to hinder the development of consumer credit, according to a recent article in Financial News.

Economists believe that consumer credit or loans can go far in stimulating domestic demand, guaranteeing the steady growth of the economy, and giving Chinese people a more convenient way to buy goods and services.

Commercial banks also expect the emergence of the consumer credit business to raise their asset quality and liquidity. An official market survey shows that about 40 percent of Chinese people are keen on bank loans.

Experts believe that people's zest for consumer credit, especially for personal housing loans, will increase substantially as China's urban housing reform is gradually carried out. Since November, 1998, the Industrial and Commercial Bank of China (ICBA) has offered ten consumer loans, including those for home buying, home repair, automobile purchase and even for travel. But the development of China's consumer credit market is still far from satisfactory.

At the end of 1998, only one percent of China's total consumption was made through consumer credit; the figure is usually over 20 percent in western developed countries.

Chinese customarily spend no more than they have, and the proportion of personal income they deposit has always been high. Only 31 percent of Chinese are interested in the consumer credit business. Other research shows that in China's five largest cities, including Beijing, Shanghai and Tianjin, 59 percent of the citizens know about the personal loan business, but have never considered using a loan.

The report also said that four percent of the citizens worried about revealing information on their personal finances and want nothing to do with credit services.

Chinese people's loan repayment ability is still weak: The average per family monthly income in 35 major Chinese cities is 1, 500 yuan (about 180.72 US dollars). Deducting the average monthly living costs, a family has only 400 yuan (about 48.19 US dollars) available for loan payments.

Experts said that China needs a comprehensive personal credit system to support its rising consumer credit business.