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Policy Options on Promoting Rural Credit Cooperatives’ Service to Agriculture, Rural Areas and Farmers(No.160, 2016)


By Zheng Xingchen & Zhang Zhongfa, Research Team on “Strategic Research on China’s Financial Reform”, DRC

Research Report No.160, 2016 (Total5043) 2016-11-30

Abstract: Nowadays, strengthening financial support for agriculture, rural areas and farmers is essential for China to build moderately prosperous rural areas. Promoting financial support for agriculture has always been the main task as well as the difficult problem of rural work. As the main force in rural financial services, rural credit cooperatives provide 63% of the total rural household loans. Its role cannot be replaced by commercial banks. At present, the rural credit cooperatives are faced with asymmetric competition and the mismatch between the rights and responsibilities of policy-related businesses. The local policy support for rural credit cooperatives are insufficient in some places. The following policy options are made to enhance policy support to rural credit cooperatives so as to promote their support to agriculture, rural areas and farmers. First, the cost of micro-credit operations need to be reduced. Second, local governments need to be urged to address relevant financial risks. Third, the organizational system of rural cooperatives needs to be reformed and innovated. Rural credit cooperatives, modern cooperatives, and supply and marketing cooperatives could be integrated to launch demonstration projects for common prosperity. Fourth, more items relating to rural financing service products need to be increased and improved. Fifthly, the rural financial development environment needs to be fleshed out.

Key words: rural credit cooperatives, support agriculture, promotion, conception