Why Chinese Are Diverting Their Consumer Loans to Real Estate

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…

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