The number of credit cards in use on the Chinese mainland has more than doubled over 2006 to more than 40 million, FT.com reported citing a report released by McKinsey, the consultancy, on Friday.

The report estimates the number of credit cards in the Chinese mainland has doubled each year for four years in a row to reach about 43 million by mid 2007.

However, given its huge population, China has very low penetration rates. It signifies a huge potential for an industry that would mean 13 billion yuan (US$1.73 billion) in profits by 2013, according to the report.

A recent survey by CCTV shows that only 20 percent of Chinese own a credit card, while in some developed countries the penetration rates are over 80 percent.

Most of the Chinese tend to be conservative, and they feel more comfortable with the practice of spending the money they really own.

According to the McKinsey report, 94 percent of credit card holders pay off the balance of their cards before they have to make any interest payments.

"We have still not made money on credit cards and this is because of Chinese people's spending culture," said a senior Chinese banking official.

He said Chinese banks were working to increase the use of credit cards and the length of time customers take to repay but were mindful of the risks involved in indiscriminate card issuance and eager to avoid the repayment crises seen in Taiwan Province and the Republic of Korea in the past decade.

China is now making efforts to open up its financial industry wider. Analysts say the government is soon expected to open it to overseas banking groups such as HSBC and Citigroup, which are now only allowed to offer co-branded cards with domestic partners.

For the past few years the central government has encouraged the creation of a consumer credit industry to promote private consumption and balance China's rapid economic growth.

As the necessary payment infrastructure expands rapidly across the country, Chinese consumers are using credit cards to pay for an increasing array of goods and services.