BEIJING—China’s government hoped more household borrowing would help the economy become more consumer-oriented. But instead of shopping, many Chinese are spending the money on real estate, undermining Beijing’s efforts to cool that market. Chinese banks, encouraged by policymakers, have recently been lending more to households as companies sink perilously deep into debt. At first banks did this with mortgages; this year they have stepped up short-term consumer loans. ...
Chinese consumers are using bank loans for down-payments on home purchases even as the nation seeks to redirect investment away from China's hot real estate market. People's Bank of China figures reveal that while short-term consumer credit surged just 10.4% in the first eight months of the year, retail sales rose 160% in August. Many consumers in China view property as a secure way to store their wealth at a time when alternative investments offer poor returns.