A global consumer default wave is just getting started in China

March 29: Like millions of people around the world, Zhang Chunzi borrowed money she thought she'd be able to repay before the coronavirus changed everything.

Now laid off from her job at an apparel exporter in Hangzhouone of China's most prosperous cities-the 23-year-old is missing payments on 12,000 yuan ($1,700) of debt from her credit card and an online lending platform operated by Jack Ma's Ant Financial. "I'm late on all the bills and there's no way I can pay my debt in full," Zhang said.

Her story is playing out in similar ways across China, where the virus outbreak has been taking lives and ravaging the economy for more than three months. As Covid-19 works its way through the rest of Asia, Europe and the Americas-forcing countries into lockdown, driving up unemployment and pummelling smallbusiness owners-analysts say it's only a matter of time before stretched households globally start to default on their loans.

The early indicators from China aren't pretty. Overdue credit-card debt swelled last month by about 50 per cent from a year earlier, according to executives at two banks. Qudian Inc, a Beijingbased online lender, said its delinquency ratio jumped to 20 per cent in February from 13 per cent at the end of last year. China Merchants Bank Co, one of the country's biggest providers of consumer credit, said this month that it "pressed the pause button" on its credit-card business after a "significant" increase in pastdue loans. An estimated 8 million people in China lost their jobs in February.

"These issues in China are a preview of what we should expect throughout the world," said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

While the extent of the squeeze on consumers and their lenders will depend on the effectiveness of government efforts to contain the virus and shore up economies, the scope for pain is immense.

Household debt-toGDP ratios in countries including France, Switzerland, New Zealand and Nigeria have never been higher, according to a January report from the Institute of International Finance.

In Australia, which has the highest household debt levels among G20 nations, the country's largest lender said on Thursday that its financial assistance lines are receiving eight times the normal call volume. A similar surge in queries has flooded lenders in the US, where credit-card balances swelled to an unprecedented $930 billion last year and 3.28 million people filed for jobless benefits during the week ended March 21 -- quadruple the previous record.

Consumer default rates at some Chinese banks have already increased to as high as 4 per cent from about 1 per cent before the outbreak, according to Zhao Jian, head of Atlantis Financial Research, who cited a survey of lenders. An executive at one major Chinese bank said his firm is taking steps to tighten credit card loans or even drop some clients after seeing a rapid increase in overdue payments.

With corporate delinquencies rising as well, banks could face a 5.2 trillion yuan surge in total nonperforming loans and an unprecedented 39 per cent slump in profits this year, according to a worst-case scenario outlined by UBS Group AG analysts this month.