Highlight on China, Part 3 - Interview with the World Bank

This interview provides the perspective of Mr. Wang Jun, China Financial Sector Coordinator at the World Bank, on the microfinance landscape in China. Mr. Wang Jung lists the following highlights of the overall microfinance landscape in China:

• The Central Banks liberalization of the interest rate;
• The heightened awareness of microfinance as a poverty reduction tool;
• New microfinance programs that have brought private investments into the microfinance industry;
• The China Development Banks small and medium enterprises (SME) lending program;
• The possibility of China becoming a large, commercially sustainable microfinance market.

Mr. Wang Jung speaks about the following challenges to expanding financial services to the rural areas, as well as the Governments role in addressing these challenges:

• The remaining lending interest rate ceiling for rural credit cooperatives (RCCs);
• The need to create a diverse financial market for RCCs;
• The need for financial infrastructure to lower transaction costs and the build-up of a consumer credit information system in the rural areas;
• Development of an effective regulatory framework for rural finance.

The interview concludes with Mr. Wang stating that bilateral and multilateral funders and development partners can act as catalysts for change by:

• Coordinating to promote reforms and development in the rural and microfinance sectors;
• Keeping each other informed and thus, avoiding duplication.