China’s struggling banking sector is facing a major challenge as crackdown on inactive accounts and weak consumer spending have led to a steep decline in the number of credit cards in the country.
In its report on payment earlier this month, the People’s Bank of China (PBOC) informed that the number of credit cards owned by consumers in China has come down to 687 million – 9 million less than the preceding three months, South China Morning Post reported.
Notably, the total number of accounts holding credit cards peaked at 807 million in September 2022, but it has reduced by nearly 15 per cent during a 14-straight-quarter decline.
Analysts believe that the negative trend highlights the mounting pressure on Chinese lenders dealing with “sustained sluggishness in consumer demand” as well as big rise in non-performing loans. The performance of Chinese banks have faced a road block since 2021 due to being highly exposed to the country’s embattled property sector, SCMP report states.
Independent analyst Dong Zheng, monitoring mainland Chinese banks’ credit card businesses for 26 years, shared that in terms of transaction value, the 12 major listed banks of the mainland have registered an average 11 per cent year-on-year slide on consumers’ purchases of goods and services through credit cards last year. This shows that the retail spending was becoming weaker amid a slowing economy.
Dong added that the transaction value generated by credit cards at these 12 listed banks hit an average 1.9 trillion yuan (US$279.3 billion) last year.
The analyst indicated that the consumption willingness remains weak, while a “sluggish property market has weighed on Chinese consumers”.
“Since millions of families have witnessed a great drop in value of their housing units, they became more cautious on retail spending,” he added.
With banks reporting declining income from their credit-card businesses, this increases the chances for default risks amid a rising non-performing loan (NPL) ratio.
In its earnings report, Industrial and Commercial Bank of China, the mainland’s largest lender, informed that total debts overdue arising from credit cards accounted for 4.61 per cent of its total at the end of 2025. It was 3.5 per cent a year before that.
Qi Xing, chief banking analyst at Northeast Securities, told SCMP that the non-performing loan ratio of credit cards has “risen markedly in recent years, and that of some banks has far exceeded other types of consumer loans”.
“More importantly, regulators are pushing banks to scale back online consumer loans… Individuals who resorted to various loans to increase leverage were restricted from further borrowing. Some of them have been unable to repay their credit cards,” the expert added.
Looking at the current situation, banks remain cautious before issuing new credit cards. They are believed to have tightened credit card approval procedures. Earlier, a Chinese bank used to reject a consumer’s application if they already held more than five credit cards issued by other banks. The threshold has now come down to three.
The report further highlights that the pace of issuing new credit cards has declined, while more inactive accounts have been closed over the past four years.
In order to tighten regulations on credit card businesses, the PBOC had in July 2022 implemented new rules. Under this, cards having no transactions for 18 consecutive months should represent below 20 per cent of a bank’s total number of credit-card accounts.