"I'm a little embarrassed," Liu Jing leaned in closer and lowered her voice, revealing for the first time a hint of discomfort since the topic of credit cards had been broached.

Liu was born in Henan. After four years at the university she landed a position as a junior executive at a digital advertising firm.[Hong Kong company registration]

As a junior executive, she netted 5,000 yuan (US$800) a month after taxes. From this, she paid 2,000 yuan per month in rent for a shared flat near Beijing's fourth ring road. This left her with 3,000 yuan a month in disposable income, or 100 yuan a day.

With this sum, she had to cover her remaining living expenses. She was hard-pressed to make ends meet.

At this moment, a friend recommended that Liu apply for a UnionPay credit card from one of China's large state-owned banks.

At first, Liu used the card to make ends meet.

But as time went on, the allure of this "extra" income and the social benefits it allowed compelled Liu to slowly increase her borrowing. She soon discovered that borrowing is a slippery slope.

After using the card for one year, she had accumulated debt of 15,000 yuan, or three times her previous monthly income. She had no plan for paying off the balance.

Since being introduced in 1985, the number of credit cards issued in China has grown at an astonishing rate, reaching 285 million in 2011, five times the number in 2006. Growth has remained consistently high and is expected to continue at 31 percent per year over the next five years.

According to the 2012 Chinese Credit Card Industry Bluebook, US$1.2 trillion of purchases were made with credit cards in China in 2011, a year-on-year increase of 48 percent.

MasterCard projects that annual credit card spending in China will more than double by 2025, and over the next decade, the country is expected to become the largest credit card market in the world by number of issued cards, overtaking the United States.

Although the figure is high, it is worth noting that in China, credit cards are still used mostly for large-ticket items, while cash is still the predominant payment method for smaller purchases. Indeed, one study on credit card holders in Shanghai showed that 80 percent of purchases below 100 yuan are made with cash.

[Set Up Company Hong Kong]Changing attitude

Despite these optimistic growth projections, China's cash-centric consumer culture and traditional beliefs about personal finance have meant that consumers are resistant to change, thus slowing the adoption of electronic payment methods.

Many of these cultural beliefs stem from Confucian values, which see borrowing as shameful because it means living beyond one's means, and which state that a good person always saves for the future. Indeed, studies have shown that the majority of Chinese consumers remain uncomfortable about borrowing for daily consumption.

However, Western consumption-driven lifestyles are finding their way into China, especially among the youth.

This is demonstrated by the materialization of a new class of yue guang zu, those "with no savings at the end of the month." This group includes young urban students and professionals under 35, largely in first and second tier cities, who have begun to abandon some of the cultural taboos surrounding borrowing money in order to fund their modern, highly consumerist lifestyles, in some cases spending well beyond their means.

Many of these changes in the cultural attitude toward credit have been driven by aggressive marketing by banks issuing credit cards, which offer rewards, discounts and lucky drawings to encourage spending.

Greedy banks

A number of banks now make it very easy to obtain a card, even for young consumers with no income. Some bank customers have even reported receiving in the mail high-limit credit cards for which they never applied.

A Jiao Tong University study also examined attitude factors that drive credit card use, concluding that "social power," the desire to display material wealth, played a significant role in the willingness to take on debt. These findings point to the adoption of western consumer-centric attitudes and the shedding of traditional reluctance to take on debt among young, urban Chinese.

As consumption plummeted in Western countries in the wake of the financial crisis, the Chinese government realized the importance of encouraging domestic spending as a way to compensate for diminished demand for its exports, and it has attempted to change the savings culture.[Hong Kong Company Formation]

One significant concern is whether regulatory oversight of Chinese banks is sufficient to prevent a consumer-credit bubble. Asia as a region has seen a number of such events over the last 15 years.