The 5-year plan for national rural economic development, issued by NDRC on 17 November 2016 by NDRC, a China Economic Net article reports, focuses on

  • improving the rural financial system by
    • developing commercial finance, cooperative finance and policy finance
    • setting up a multi-level, wide-coverage, sustainable modern rural financial system
  • promoting rural financial service innovation and product innovation by
    • directing financial resources towards rural China
    • increasing agricultural credit
    • maintaining the proportion of agriculture-related loans
    • improving the system so that financial institutions’ rural deposits shall be mainly used for rural and agricultural development
  • improving the agricultural insurance system by
    • expanding agricultural insurance coverage
    • increasing insurance varieties
    • improving the level of risk protection
    • developing new types of agricultural management

Experts point out difficulties and imbalances in rural finance reform, including rural financial business operating costs, high risks, information asymmetry and insufficient supply, to which the government responds by promoting monetary policy, fiscal tax policy and poverty alleviation policies, the article says, citing a CASS report of 3.5 tn financial gap for the ‘three rurals’.

There is a shortage of funds, but also of financial institutions and of functions and services provided by current institutions, says Li Yongjian 李勇坚 Chinese Academy of Social Sciences Institute of Financial Economics director of Internet economics research.

Besides banking, insurance and direct financing, internet finance will play an increasing role, reaching 320 bn by 2020, says Xu Hongcai 许宏才 China Centre for International Economic Exchanges (CCIEE) Economic Research Department director.

Li points out internet finance growth has weak foundations, with less than ten of 2,000 P2P platforms focusing on rural finance. Internet finance cannot mitigate agriculture risks, nor meet agricultural needs, Li argues, calling for risks control capacity building.