Rural Finance in Poverty-stricken Areas in the People's Republic of China: Balancing Government and Market

Making rural finance accessible

211 pages

This book discusses issues in the People’s Republic of China (PRC) rural finance market, particularly the reasons for recent reform measures, and key market and institutional changes.

Despite significant progress in the general financial reform of the PRC, rural financial reform has been lagging. Problems in the rural finance market include:

Use of urban finance to guide rural finance;
Replacement of informal finance by formal finance;
Domination of rural credit cooperatives in rural areas;
Difficulty in rural financial innovation;
Lack of clarity in the mission of rural finance to sustainably support agriculture and agricultural industry;
Excessive local government intervention in rural financial institutions.

The book emphasizes the need for a bottom-up approach in rural financial market development to meet local demand and adapt to local financial risk profiles. It recommends effective supervision of rural financial market participants through government and market communication, and opening the rural financial market. Other recommendations include encouraging competition among innovative approaches and different types of institutions, as well as ensuring better services and higher efficiencies.