* New generation of young adults embrace debt like never
* China's millennials among most indebted of their peers in
* For next generation, liabilities set to rise further
* Millennials often borrow beyond means
* Boost consumption, economy, but a risk for China's debt
By Engen Tham and Adam Jourdan
SHANGHAI, Dec 12 Ma Yiqing, 24, is typical of
China's younger generation - he uses his credit card frequently
and borrows from online platforms to fund his shopping habits.
In a pinch, he is happy to fall back on a lender closer to home
- his mum and dad.
Interviews with Ma, a single-child, his mother and
grandmother, show how rapidly attitudes towards credit are
changing as the millennials generation - roughly those aged
between 18 and 35 - embraces debt like never before.
The frugal attitude of previous generations produced the
bedrock of China's credit worthiness - household savings equal
to some 50 percent of GDP, one of the highest levels globally.
Ma and his cohorts are changing that equation. Their
willingness to borrow has driven up household lending - the
fastest growing area of China's debt. They are among the most
indebted of their peers in Asia, taking on debt 18.5 times their
income, significantly higher than their parents' generation, a
report from insurer Manulife shows.
While their spending and borrowing is an opportunity for
lenders, brands and economic growth, it is also a risk as they
add to China's fast-growing debt.
Right now, Ma has a safety net - well-heeled and doting
parents who can pick up the tab. He lives in a one-bed flat in
Chinese-controlled Lhasa, the administrative capital of the
Tibet Autonomous region. His parents are in nearby Shannan.
"I'll generally turn to mum and dad. They've always been
able to help me financially," said Ma. In May, he asked his
parents for financial support to open a restaurant. "I just need
to ask and they'll give me (money)."
Parents paying off the credit card bills of their millennial
children is not unusual in China, but it could have
ramifications, said Rui Yao, an associate professor in personal
finance at the University of Missouri.
"They don't see the consequences of not paying. The thinking
is 'my mom has it covered'", she said. "They're not prepared for
an economic downturn for sure."
The next generations may not be so lucky either. They will
have to support longer-living parents and potentially more
children as China relaxes its one-child policy. China's ageing
population is already shrinking, which means greater financial
pressure on those working to support those who are not.
Ma says he is more frugal than his friends. He uses his bank
card and Ant Check Later, a popular online lending platform
owned by tech giant Alibaba Group Holding Ltd.
This is a far cry from his parents' generation. Ma's mother,
who is 49, only started using a credit card three years ago.
"They couldn't spend on overdraft, so they really didn't
squander any money," he said.
The gap is clear: consumer credit is up nearly 300 percent
over the last six years alone, hitting around 23.5 trillion yuan
($3.41 trillion) in October.
This is set to more than double over the next five years to
nearly 53 trillion yuan, according to consultancy Mintel.
While mortgages are the lion's share of household debt,
credit card and consumer loans have shot up from just 4.6
percent of household debt in 2015 to 16 percent now, BMI
"The young generation today has a totally different attitude
to my generation," said Ma's grandmother, Wei Chunyin, 76. She
grew up in the 1960s and said she was in debt just once - for
100 yuan, the equivalent today of $14.50.
"We were very economical and hardworking," she said.
"Clothing was just to wear, and we wouldn't even really eat
snacks, just food from our unit," she said, referring to her
Ma's generation is the first in China's modern history to be
raised in relative prosperity and social stability.
They are better educated and already more affluent than
their elders. Boston Consulting Group and AliResearch said they
are expected to drive 65 percent of consumption growth until
2020, when they will make up around 53 percent of total
consumption spending, up from 45 percent now.
"Understanding their mindset is critical and anybody ignores
them at their peril," Yum China Holdings Inc head Micky
Pant said in an interview.
Their potential has not been lost on the banks, with some
specifically targeting them for loans.
"Internally our appraisals are skewed towards the young
consumer groups. For example, front-line sales staff get a bonus
1.3 times the normal level if they sign a young customer," said
a banker in the credit card department of China Merchants Bank,
a leading credit card provider.
"So everyone is out looking for youngster to sign up."
When asked about the strategy, CMB said it has many credit
card products that are welcomed by young people.
Bankers said lenders often know millennials have doting
parents to fall back on in a pinch.
"Taking a darker read on it, the parents of the post-90s
generation - who were born in the 60s or 70s - haven't yet
retired, and are financially pretty secure," said a debt
collector in the credit card department of a listed city bank.
Like other parents in China, Ma's mother and father, a nurse
and government officer at the local Meteorological
Administration respectively, are resigned to supporting their
son financially for now - even if he defaults.
Ma's mother, Zhen Yinchun, said that when she was young she
saved around one-third of her income because there was little to
spend it on, in contrast to her son.
It is a running joke in the family whether Ma will return
any money he has borrowed, she said.
"I'll say it's a loan and he'll agree. But up to now he's
never paid anything back," she said.
(Reporting by Adam Jourdan and Engen Tham; Editing by Neil