China’s young, affluent consumers are wary about debt, according to new research.

Researchers at The University of Nottingham Ningbo China (UNNC) and Australia’s Monash University looked at the attitudes of the single offspring of wealthy Chinese parents towards credit cards.

China needs to increase domestic consumer spending to reduce its reliance on exports. The world needs China to increase its consumption to Gross Domestic Product ratio, which at about 36 per cent is half that of the US, to boost demand for imported goods. Banks, too, are eager to see more spending in China.

There are at least 230 million credit cards believed to be in circulation in China , which means the industry has only scratched the surface of the hundreds of millions of potential customers. With annual profitability per card thought to be only about US$1/per card in China, there is also huge potential for credit card companies.

There are now plans to widen the study, which is published in the latest Journal of Retailing and Consumer Services.

The researchers – Monash’s Steve Worthington and David Stewart and Frauke Mattison Thompson, Assistant Professor of Marketing at Nottingham University Business School China – studied over 150 UNNC students and found that China’s young affluent consumers like credit cards, and may have several.

However, they aren’t building up much debt on them, partly because they fear losing control over their personal finances. Another factor is the limited availability of card-accepting terminals in stores.

Dr Mattison Thompson noted that China “is very savings centric, rather than borrowing centric, and very cash centric, rather than card centric, when it comes to payment at point-of-sale”.

“This is why debit cards, which essentially access cash in a bank account rather than debt, are very popular: there are believed to be more than 2.1 billion debit cards, yet the population is 1.3 billion,” she said.

“Students seem to be aware that paying by credit card can encourage spending beyond their budget,” added Prof Worthington.

Significantly, the qualitative research produced interesting thoughts from students about “feeling guilty using future money”. This suggests, said Prof Worthington, that they retain many of the conservative cultural attitudes of their parents and grandparents, who remember periods of severe hardship.

“As China continues its economic growth and as domestic consumption is increasingly seen as a means of sustaining that growth, so Chinese consumers will be encouraged to spend more on themselves,” said Prof Worthington. “Research like this can play an important role in filling the knowledge gap about how the young, affluent adopt an innovative financial product in the Chinese cultural context.”