China: Country Overview

This paper provides an overview of the microfinance sector in China. It states that China has done an excellent job of reducing poverty. However, there are still more than 120 million people under the absolute poverty line. This population represents a huge market for microfinance.

The paper then outlines major trends in the Chinese microfinance sector:

• Three types of microfinance models have emerged over the past decade:
  • Non-government organization (NGO)-led microfinance;
  • State-run microfinance;
  • Formal financial institutions including Rural Credit Cooperatives (RCCs) and city commercial banks.
• Donors and policy makers are concentrating their efforts on financial institutions involved in microfinance, particularly RCCs;
• NGO and quasi-NGO sector of microfinance are trying to gain political/ Central Bank recognition to operate as legal entities in civil society.

The paper states that major opportunities exist for PlaNet Finance in China as the trends of RCC reform, NGO self-regulation and commercialization of the microfinance sector continues.Finally, it proposes a PlaNet Finance's Strategy for microfinance in China, which outlines strategies for:

• NGO type microfinance institutions (MFIs);
• RCCs;
• Rural bank-led microfinance programs;
• Urban bank-led microfinance programs;
• Microfinance sector;
• China microfinance network.