Despite the reputation of Chinese households as prudent savers, consumer debt has been rising rapidly in the country and by some measures surpasses U.S. levels.

What does this debt burden mean for Beijing as economic growth slows and comes under further pressure from the burgeoning trade conflict with the U.S. and the authorities' campaign against financial risk? Can the government, as many Western investment banks and fund houses say, count on consumer demand to sustain the economy?

China has long been widely touted as a nation of savers. According to the International Monetary Fund, China saves 46% of gross domestic product every year. Credit Suisse pegs China's savings rate at 32% of household income and at 35% for the key 18-to-29 year group.

With such savings rates, Chinese households should be in fine shape. Yet policymakers are increasingly worried about the rising level of household debt.

A few years ago, any rise would have been written off as insignificant given the relatively low absolute level of the borrowings. Now with credit card and bank debt rising rapidly and taking a significant share of bank and household balance sheets, these worries can no longer be ignored.

Bank lending to households, mostly tied to real estate, is up 73% since June 2015. Household borrowings now account for more than a third of bank loan books.

Roughly 1 million credit cards are issued every 4.5 days in China. Outstanding card balances are now comparable to those of the U.S. after a doubling between September 2015 and last March when they reached 5.8 trillion yuan ($870 billion); Chinese credit card debt though is expanding at three times the rate of American balances.

Much consumer borrowing takes place outside of the formal banking system. Peer-to-peer lending for example nearly tripled in volume to 2.3 trillion yuan between 2015 and 2017.

All this has turned Chinese households in a flash into some of the most indebted in the world. Per capita household debt to financial institutions is now 31,200 yuan. Disposable income per capita is officially 26,000 yuan.

A household debt-to-income ratio of 120% should concern anyone. With household debt growing around 20% a year, the growing imbalance looks downright frightening. With disposable income only rising at 9% a year and trending down, this imbalance will continue to grow rapidly.

In terms of debt-to-household income, China would be placed right in the middle of members of the Organization for Economic Cooperation and Development. Despite China's reputation as a nation of savers, its households embarrassingly now hold more debt than those of the U.S. and Japan, whose ratios are 111% and 108% respectively. Given the pace of credit expansion, China is set to rise up the tables.

Actually China's household borrowers are likely also its savers. Given the country's lack of an established consumer credit rating system, banks are wary of lending to consumers who are not longtime customers or who do not maintain significant deposits. China's upper middle class has rapidly absorbed Western financial values.

Much of the new debt has been used to finance property purchases, whether in the form of mortgages or not. Indeed, regulators are concerned credit cards and other short-term loans are being used for home buying too.

Despite headlines claiming otherwise, banks have not really been tightening up even on traditional mortgage lending; mortgage issuance volumes were up 20% in the January-March quarter from a year earlier.

The framework of debt and real estate drives Beijing policy. With 20% to 30% of China's GDP dependent on real estate development and related industries -- and consumer confidence critically linked to rising property values -- Beijing knows it must keep home prices buoyant.

From a consumer viewpoint, taking on more debt makes perfect sense. During 2017, the average price per square meter of a city apartment rose to 13,967 yuan from 13,035 yuan.

Given an average apartment size of roughly 100 sq. meters and an average household size of about three persons, this means that the average urban household made 93,200 yuan from home price appreciation last year on top of conventional disposable income of 109,000 yuan. No wonder Chinese consumers are so willing to take on more debt to buy property.

Beijing's buzzword is rebalancing -- a drive to shift from growth powered by investment and savings to a consumption, innovation and service-based economy. Central planners thus are focused on boosting consumption to demonstrate a rising standard of living commensurate with China's newfound status as major economy.

But in fact, 45% of the population still lives on just 13,400 yuan a year. Rural migrants make on average only enough to buy about 1 sq. meter of the average city apartment, hardly enough for them to permanently urbanize.

Beijing's concern is that if it reined in the growth of consumer debt by a significant degree, housing prices would take an enormous hit which in turn would drive down economic activity. But Beijing also cannot allow consumer credit to increase 20% annually when Chinese households are already three times more indebted than Russian and Mexican households with similar incomes.

At the same time, Beijing cannot allow even a moderate employment downturn because of the risk that would raise the risk of substantial consumer defaults. State-owned enterprises may be able to default repeatedly or drag out repayments to sympathetic state banks. Consumers will not have that option.

What then can Beijing do? It must use its ownership of the vast majority of banks to enforce tighter limits on mortgage lending and make the new China Banking and Insurance Regulatory Commission monitor compliance. The slowdown in corporate shadow banking credit growth shows Beijing can have an impact when it resolves to. Borrowers who misstate how they use proceeds of other types of consumer loans to conceal payments for property should be prosecuted for fraud.

China is not a democracy but this does not mean that the Communist Party does not feel pressure to continue to drive rapid economic growth and improve living standards. The implicit arrangement is that party technocrats improve economic well-being in exchange for total political control. Should growth falter, the ground under this paradigm could give.

A downturn would likely hit consumption activities as measured by retail sales which are already growing at their slowest pace in more than a decade. Given the elevated risk consumer debt presents over corporate debt, Beijing would be wise to take the growth in household borrowings just as seriously.

Christopher Balding is an economist and the author of "Sovereign Wealth Funds: The New Intersection of Money and Power."