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Prosper or PerishCredit and Fiscal Systems in Rural China$
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Lynette H. Ong

Print publication date: 2012

Print ISBN-13: 9780801450624

Published to Cornell Scholarship Online: August 2016

DOI: 10.7591/cornell/9780801450624.001.0001

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The Rural Financial System and Rural Development in China

The Rural Financial System and Rural Development in China

Chapter:
(p.27) 2 The Rural Financial System and Rural Development in China
Source:
Prosper or Perish
Author(s):

Lynette H. Ong

Publisher:
Cornell University Press
DOI:10.7591/cornell/9780801450624.003.0002

This chapter examines rural credit cooperatives (RCCs) in the context of China's rural financial landscape, with particular emphasis on their significance to the rural economy and households. China's rural financial system serves roughly 800 million people, who live in large swaths of hinterland in the central and western provinces and in rural and peri-urban locales in the eastern coastal provinces. Despite a diverse range of credit demands, the official rural financial sector has been largely monopolized by RCCs and, until the late 1990s, the state-owned Agricultural Bank of China (ABC). Since 1998, the ABC has been offering poverty alleviation loans at a subsidized interest rate to rural households in poor counties. This chapter first provides an overview of China's rural financial sector before discussing the importance of rural savings for rural households. It then considers township and village enterprises and the history of RCCs, along with the informal credit sector. It shows that the savings of rural households have been channeled to finance urban development, reflecting an inherent urban bias in China's development strategy.

Keywords:   rural credit cooperatives, China, rural financial system, rural savings, Agricultural Bank of China, poverty alleviation loans, rural households, township enterprises, urban development

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