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Beijing. Beijing retiree Yuan Yizhong cut up his son’s seven credit cards in a frenzy of anger when he discovered the 29-year-old had racked up huge debts he could not afford to pay back.

Yuan used most of his life savings to repay his son’s credit card bills, totaling 200,000 yuan ($29,300), but managed to pay only about half. “My son will get my house after I die, but I’m afraid it might not be enough,” he said.

Stories like Yuan’s have forced China’s government and banks to rein in a credit card industry that expanded too far, too fast in a country with little history or experience with personal debt.

Credit cards gained popularity in China as the middle class expanded and living standards rose, and as the government encouraged their use to stimulate domestic consumption.

But rising debt, especially among young Chinese who were poor candidates for credit cards in the first place, has put a strain on some families. So the government is acting.

“In the past two years, banks have blindly issued credit cards,” said Nie Junfeng, an expert on personal debt at Citic Bank, China’s seventh-largest lender.

“The bubble has started to form and the risks rooted in false application information and low-income customers are beginning to emerge.”

China’s banking watchdog, the China Banking Regulatory Commission, told banks in July not to offer gifts to new credit card holders, set quotas for their sales staff, and perhaps most importantly, not to issue cards to people under 18.

The regulator’s admonition followed the disclosure by the People’s Bank of China that 4.97 billion yuan of credit card payments were at least 60 days late in the first six months of the year, a jump of 133.1 percent from a year earlier.

Policy makers are keen to ensure that if plastic does take off in China there is no repeat of the sort of uncontrolled issuance that left as many as four million South Koreans unable to pay their card debts earlier this decade.

The number of credit cards issued in China nearly tripled to 142 million in 2008 compared with 2006, with total transaction volume hitting 3.5 trillion yuan, the country’s central bank said in a report in April.

About 1.9 billion credit cards are believed to have been issued since 1985.

Cash is still king in China, but plastic is becoming popular. Nearly all shops and restaurants in major Chinese cities now accept credit cards.

Credit cards may help people feel comfortable spending more, assisting Beijing in its efforts to increase domestic consumption to stabilize the Chinese economy and protect it from external downturns.

Guo Tianyong, a professor at Beijing’s Central University of Finance and Economics, predicted that the ratio of bad credit card debt would rise to 3 percent this year, from 2.4 percent at the end of last year. In the United States, it is about 10 percent.

How easy was it to get a credit card in China?

Last year, students at a Xian university were astonished to discover they had been given credit cards by a major Chinese bank. The university had filled in the application forms without the students’s consent or signatures to help the bank achieve its credit card quota, resulting in more than 10,000 credit cards being issued to unwitting students.

Reuters