When Xiao Yang ran a little short of cash to make the mortgage payments on her new apartment, the option that seemed best to her - take out another bank loan to buffer the difference.

She had her 24-year-old son do just that. She is confident they will repay both loans, once she collects the money her sister owes her from a while back.

It's a tale that would make a credit counselor's head spin in the Western world, but a scenario that is becoming increasingly common here as Chinese consumers, lured by the glitter of material wealth, take on previously unseen debt.

China is still largely a nation of savers. But that is beginning to change as the country's banks are rushing to expand consumer credit options. While the loosening of credit could be a boon for banks and a ladder up for consumers, analysts are concerned the pace of change might saddle China's troubled banking system with more bad loans and leave inexperienced borrowers over their heads in debt.

"The banks have been very lenient so far," says Li Kui-Wai, economics professor at the City University of Hong Kong. He notes that people have been able to get credit cards and loans by using false names and identification papers. "The system is really a problem," he says. "Who manages this? Which sector is it?"

Although the government has announced plans to implement a national credit system, and has implemented the first portions in major cities, there's no real mechanism to prevent banks from handing out loans like candy.

Along with steady increases in home loans, several international companies in the past year have won approval or announced plans to start offering auto-finance loans here. Already they've complained of loan defaults. Credit cards are fast gaining acceptance, accounting for 10 percent of all transactions in 2003, and usage, with 1 million Chinese cardholders, and the numbers growing every month, according to the central bank.

The push anticipates competition from foreign banks that will be allowed access to China's domestic market in 2007 under the WTO agreement.

Foreign banks are already knocking down China's doors to get a piece of the market. Although they hold less than 1 percent of the country's total banking assets, non-Chinese banks are a noticeable presence. Nine Chinese banks have international partners and another nine are in partnership talks, state-media reported last month. Their primary target is clear: not corporations or financial management, but Chinese consumers.

Personal money-management packages and consumer banking are ripe for international banks entering China, authorities say, because domestic banks have done little in that arena.

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