Rural China badly needs bank loans

Updated: 2006-04-24 09:53
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A senior Chinese banking official has said there remains huge potential for banks to finance rural development, as agricultural-related loans amounted to less than one-fifth of all lending by 2005.

China Banking Regulatory Commission Vice Chairman Tang Shuangning told a financial reform forum in Beijing recently that the development of urban and rural financial markets is lopsided.

China is launching an aggressive move to narrow the urban-rural gap that has emerged since the reform and opening-up drive began in 1979. As stocks, bonds and other markets are still nascent, banks offer more than 90 percent of the funds that enterprises need.

Outstanding agricultural loans came to 4 trillion yuan at the end of last year, with their growth rate falling 12 percent behind the average loan increase over the past five years.

Tang said China's more than 30,000 rural credit cooperatives and other cooperative financial institutions, which represent half of the loans for the countryside, are plagued by poor assets quality, heavy financial burdens and frequent irregularities.

Agricultural Bank of China and Agricultural Development Bank of China are also major rural loans providers.