China: IFAD's Assistance with Reform of the Rural Finance Sector

This paper documents the experience of International Fund for Agricultural Development (IFAD) in assisting the rural finance sector reform in China. It states that improving the performance of Rural Credit Cooperatives (RCCs) and adding poverty alleviation-oriented financial products to their portfolios are crucial for developing sustainable rural financial services in China. The paper highlights two major considerations that drive IFAD's Rural Finance Sector Program:

• RCCs are an important source of financial services in rural areas and have the most extensive outreach capacity;
• Policy changes were needed for RCCs to play important roles in future IFAD projects.

Finally, the paper outlines major lessons learnt from the Rural Finance Sector Program:

• Influencing policy in China is an extremely challenging, complicated process.
• Most practical approach is to undertake pilot interventions that demonstrate good practices and trigger the interests of local and central governments in innovative approaches;
• Collaboration with like minded partners and networking with domestic stakeholders are critical to the success of any project.