Rural areas growing stronger
By Jiang Yan (China Daily)
Updated: 2005-07-19 06:22

Two years of reforming China's rural credit co-operatives seems to have resulted in more help being given to rural development.

The seeds of a new management system are in place and an overall improvement in the quality of the nation's financial institutions in rural areas is happening, says the China Banking Regulatory Commission (CBRC).

Since June 2003, pilot programmes have been launched in 29 of the 32 provinces, autonomous regions and municipalities in China, according to a statement released yesterday on the CBRC website www.cbrc.gov.cn.

Provincial-level rural credit co-operative unions, under the provincial governments, have been chosen by most areas (except Beijing, Tianjin and Shanghai), to regulate and oversee rural credit co-operatives.

Seventeen such unions have been set up already. Another nine have approval and are preparing to launch.

Meanwhile, Tianjin has the Tianjin Rural Co-operatives Bank instead, which opened at the end of last month. In Shanghai and Beijing, there will be rural commercial banks, which are preparing to open.

Besides the unions, provincial governments, the CBRC and the People's Bank of China will also have roles in the management of China's rural credit co-operatives, which will improve their ability to handle possible risks, the statement said.

By the end of the first quarter, rural credit co-operatives' non-performing loans (NPL) were 385.1 billion yuan (US$46.5 billion), down 66.3 billion yuan (US$80.1 billion) from the beginning of the year.

That was achieved with a lot of help -- a total of 98.5 billion yuan (US$11.90 billion) from the central bank.

As their combined deposit balance had reached 3.06 trillion yuan (US$370 billion) by the end of last month, China's rural credit co-operatives are now giving more support to rural economic development.

Loans given out to the agricultural sector had risen to 1.03 trillion yuan (US$124 billion) by the end of June, up 4.2 billion yuan (US$507 million) from the same period last year. Small loans to farmers grew to 176.6 billion yuan (US$21.33 billion), up 37.3 billion yuan (US$4.5 billion). Mutually guaranteed loans between farmers were worth 96.8 billion yuan (US$11.69 billion), up 31.4 billion yuan (US$3.79 billion) since the beginning of the year.

However, not everyone favours the reforms. Although rural credit co-operatives can help agricultural development, they "cannot give full financial support to the development of small businesses in rural China," said Wen Tiejun, dean of the Department of Agricultural Economics and Rural Development with the Renmin University of China.

Close