Give credit only when it’s due

A recent Shanghai report about a man who accumulated huge debts by obtaining credit cards has provoked a good deal of comment.

This was the second occasion he had got into severe financial trouble, on both occasions with credit cards. He may have had an ordinary job, but he managed to run up extraordinary amounts of credit.

This story is not unique. Throughout the world irresponsible people run up mountains of debt on credit cards.

In China, however, the attitude to credit cards, and to debt, differs slightly to that in the West. Chinese people save more money than probably any other nation in the world.

Generally, they are loathe to take out loans from banks, usually preferring to borrow the money from family and friends. But this might be changing.

Recent research by Rui Yao, an assistant professor of personal financial planning at the University of Missouri, shows that new Chinese credit card holders tend to be younger than their international counterparts.

Yao studied data from the 2008 Survey of Chinese Consumer Finance and Investor Education and said this showed that 58 percent of credit card users here were aged under 35, and only 3 percent were over 50.

MasterCard estimates that the number of credit cards in China will rise to 1.1 billion in 2025, and that spending on those cards will reach $2.5 trillion.

This might give the Chinese economy a major boost, but Yao warned that there is a dangerous lack of education in China about credit cards.

She said more than 90 percent of non-credit card users in China are unaware of security issues in credit card use, and that more than 60 percent are unfamiliar with credit card default, and its consequences.

The aforementioned man at the center of this debate deliberately flouted the rules and the law. He has almost ruined the lives of his parents who are now divorced. And his mother has had to sell their downtown home and move to a smaller suburban residence.

For many Westerners, the reaction of this man's devoted mother is the second inexplicable aspect of the case. Perhaps the banks were negligent in offering someone who defaulted on credit card repayments of another card. But for a mother to sell her own house to try to repay her son's debts is beyond the understanding of most Westerners.

In the US, Europe, Britain, Australia or Canada, core family responsibilities are diminishing. Parents see their children educated and then, when they leave home, largely feel little responsibility towards them. Children in the West increasingly see their parents into retirement homes or settlements rather than keeping them as part of the basic family structure.

Here in China it is encouraging to see that family life and traditional family responsibilities are preserved and maintained.

But, as in all things, it is the extreme cases that reveal the problems with this philosophy. A mother who is prepared to sell her home in order to save her son is, like the mothers who push their children into unhappy marriages, doing more damage to her child than those who let their young ones leave the nest and learn to fly on their own.