Rural Financial Sector Reform in China

Publication Date: 26 Oct 2004
Published by: GTZ - Deutsche Gesellschaft für Technische Zusammenarbeit GmbH
Document Type: Presentation (Microsoft PowerPoint)

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Presentation delivered at Asia Forum on Financial Sector Reforms in China held in Germany

This presentation begins by listing the profile of The German Agency for Technical Cooperation (GTZ).It proceeds with a discussion on the rural financial sector of China detailing the challenges of:

• Regional disparities;
• Rural poor;
• Financing rural households, agriculture and Small and Medium Enterprises (SME).

Further, the presentation elaborates on the:

• Institutions supplying credit in rural and urban areas of the country;
• Profile of major formal financial institutions in rural China.

The major difficulties in rural finance arise due to:

• Weak financial infrastructure:
  • Closure of many formal financial institutions;
  • Rural Credit Co-operatives (RCCs) becoming monopolistic in spite of low performances;
  • Lack of access to formal credit for rural households and firms;
  • Limited access of non-state enterprises to formal loans.
• The complications of reforming the RCCs.

Finally, the presentation concludes with some proposals for reforming rural finance in China:

• Establish a multi-tier cooperative system;
• Introduce a new legal entity for (micro)credit provision, competition;
• Use productively the Postal Savings Banks deposits;
• Provide incentives to state commercial and foreign banks to open or keep branches;
• Build capacity to develop new lending patterns.