There was frustration, desperation-and even some novel attempts at circumventing the problem. One leading US computer maker even tried cutting a deal using local banks as a payment gateway, and tried to get China's postal department to deliver its merchandise on a cash-on-delivery basis.

But the concerns were groundless and the inevitable happened: credit cards started to filter into the commercial world. By 2001, a report in the Financial Times stated that about one million Chinese had credit cards, 24 million had debit cards that offered limited borrowing, and about four percent of the nation's merchants accepted cards. These were small numbers for a country of 1.3 billion people, and even then the card usage was minimal: only about five percent of cardholders carried a balance on their cards; and only some 2.7% of consumer spending involved card usage. To put this in perspective, consider South Korea, which has less than 4% of China's population, boasts 99 million credit cards in use; and at the end of June 2003 payments due on those cards stood at 122.4 trillion won (US$105 billion), which is equal to about a quarter of all the goods and services produced by South Korea last year.

Nevertheless, the fact remains that credit card usage started to grow in China, and now several factors are expected to drive up that usage very rapidly. For a start, there's the simple fact that average Chinese workers have steadily rising incomes, giving them the means to cover their basic needs and still have money to spend. Last year the average annual disposable income in China's towns and cities rose 9.3%-to 8,500 yuan (US$1,027)-surpassing US$1,000 for the first time. With a taste for consumer spending there inevitably comes a willingness to accept credit to make purchases.

Another major driver is definitely the 2008 Olympic Games in Beijing. Anticipating a massive influx of card-wielding visitors from all over the world, the Chinese government is making it easier to use credit cards in the major cities. According to officials connected with the project, the goal is to have more than ninety percent of stores in Beijing and Shanghai accepting credit and debit cards by 2008. Allowing more foreign-branded cards into the country is expected to give the government an extra bonus: they plan to tap foreign expertise in credit control so that local banks can lift their own skills in this field and help boost consumer spending.

In fact, amongst the clearest indicators of the future are the government's moves to build a sophisticated infrastructure for credit management. As far back as March, 2002 the Chinese government set up a national clearing house to handle card transactions and foreign-bank related business transactions. The China UnionPay Company Limited is a new Shanghai-based national payment network, jointly established by a consortium of Chinese banks, and now steadily linking all major banks and payment systems in China's major cities. The company is committed to having all payment systems throughout the country linked by 2005. Two years ago UnionPay became a principal member of Visa International, the world's leading credit card, enabling Visa to open more outlets in China, and enabling Chinese citizens to acquire Visa cards for use throughout the world. China UnionPay also gains from this deal: as a principal member of Visa International, it will be able to expand international services for its member financial institutions by wider use of global resources. Part of that expansion will inevitably be heavy promotion of the use of credit cards.

So the writing is clearly on the wall for credit card usage in China. With 1.3 billion people, the world's fastest-expanding major economy and an estimated $1.3 trillion in household savings, this country is something lending institutions drool over. Joining the World Trade Organization opened the door to major international financial corporations, and the heavyweights like Citigroup, HSBC Holdings and BNP Paribas are already weighing in. In December last year, regulators in China gave the nod to a deal between Citigroup and the Shanghai Pudong Development Bank to offer China's first dual-currency credit cards. The new Visa cards allow mainland customers to make purchases and withdraw cash from more than 300,000 outlets across China and more than 20 million outlets worldwide.

This is good news for all businesses- and e-commerce entrepreneurs in particular-but the boom in credit-card usage in China has prompted concerns about spiraling consumer debt. China is attacking the problem in a novel way. In February 2004, the Xinhua news agency reported that China is planning to build an information network that pools information about its citizens from various public service sectors, including the police, family planning, taxation and educational departments. This was aired and discussed at the Working Conference on Sharing Basic Information on the Population held in Shanghai in February of this year. "There's a need for different sectors to share information. For instance, banks need information from other sources to verify the credit standing of certain people, and individuals need access to police records to ascertain the authenticity of ID cards," said an official at the conference.

But-perhaps ironically-even the voices of caution are sending out the same basic message regarding the future of credit card usage in China: it's arrived, it's here to stay-and it's going to huge.