Credit card numbers up by 93% in China

The number of credit cards in circulation around China jumped 93% in the year ending March 31 to 104.7 million, the People's Bank of China said on its website this week. The total number of bank cards, including debit cards, topped 1.58 billion by March 31, up 29.1% over the year, the bank said.

The explosion in credit-card use follows determined marketing by banks such as the Industrial and Commercial Bank of China (ICBC), the country's largest state-controlled commercial lender. In cities such as Shenzhen, Beijing, Shanghai and Dalian, pedestrians are assailed by uniformed bank staffers exhorting them through bullhorns to stop and sign on the dotted line in exchange for a card and some "gift" - usually a towel, pen set, clock or restaurant discount card.

Such sales drives helped Shenzhen-based China Merchants Bank boost its card issuance last year to 21 million, from 10 million in 2006. The total amount charged on its cards was 130 billion yuan (US$20 billion). ICBC, the market leader with a 30% share of this market, issued 22.2 million credit cards by end of 2007, attracting 160 billion yuan in spending. China Construction Bank issued 12.6 million by end of 2007 - the lender does not make available its credit card spending data

The expansion in credit-card use is also in line with government goals. Beijing, keen to encourage domestic spending and reduce the country's dependence on exports to generate growth, wants 30% of retail sales to be made through credit and debit cards in big cities by next year, from 10% at the end of 2005, according to Bloomberg. At the same time, encouraging the use of bank cards helps authorities to track merchants' business transactions and tax payments while reducing the openings for money laundering.

Bank card-based transactions accounted for 25.6% of the country's total retail sales in the first quarter, up from last year's 21.9%, according to a Shanghai Daily report. The value of bank card transactions increased even faster, rising 58% year on year to 824.6 billion yuan, boosted by higher incomes as the country's economy continues to grow at rates of about 10% a year.