Consumer finance refers to short-term loans for personal purchases of durable goods or services such as home decoration, healthcare and education. 

 

Consumer finance companies are non-banking financial institution providing Chinese residents with loans for consumption purposes. According to China Banking Regulatory Commission rules, these companies are unable to take part in deposit taking business, or provide mortgages or auto loans. 

 

China's consumer finance sector is less developed than in developed economies, but it will be one of the most promising industries in the nation in the near future, said Yan Xuan, president of Nielsen Greater China. 

 

The current penetration of consumer finance in the mainland is quite low, accounting for only about 4 percent of the total consumer lending balance, compared with up to 10 percent in more developed markets such as Hong Kong, according to a report by Boston Consulting Group in August 2011. 

 

"China is now shifting the driving force of its GDP growth from investment to domestic consumption, which will create more room for consumer finance. The consumer finance industry will experience relatively fast development in the next decade," said Sun Tianqi, assistant to the head of the research bureau of the People's Bank of China. 

 

Consumer finance serves as a key component of the government's plan to stimulate overall domestic consumption.  

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