Debt Relief Helps Car Market Overcome the “Middle-Income Trap”

Since household debt among Chinese car buyers is primarily concentrated in the housing sector, continued reductions in mortgage costs would naturally ease overall household debt burdens, giving the car market a greater chance of avoiding the “middle-income trap.” From 2025 to 2030, the number of young homebuyers is projected to continue declining, suggesting that China’s real estate market will likely remain subdued for an extended period. By 2024, the average mortgage rate in China had dropped to around 3%, with room for further cuts over the next 5-6 years –  possibly even falling below 2%;

The core middle-class consumers in China’s car market are between 30 and 39 years old – a highly dynamic and globally young demographic. They also have strong educational backgrounds, mostly college graduates, making them one of the most promising middle-class groups in the world. This gives China’s car market a solid foundation to overcome the “middle-income trap,” far stronger than that of countries where the middle-class is older and less economically active;

Overall, China’s car market is clearly trending toward greater middle-class dominance, supported by a robust demographic and economic foundation. If mortgage burdens continue to ease from 2025 to 2030, China’s auto industry is highly likely to break through the “middle-income trap” and achieve high-quality growth – laying a solid groundwork for the nation’s broader success in overcoming the same challenge.