context: Despite strong political will to channel private capital into rural sectors, practical problems such as high cost, risks and uncertainty constrain rural financial inflows. The top executives quoted below discuss ‘booming demand’ but make no mention of profits. Adding rural investments to the official performance evaluation measures for financial institutions supporting rural revitalisation may push them to participate.
Rural revitalisation needs ‘unprecedented’ capital investment of at least C¥7 tn, necessitating a huge increase in financial services and guaranteed flow of government funds to rural areas, says Yu Xinrong 余欣荣 Ministry of Agriculture and Rural Affairs (MARA) vice minister. In remarks at the high-level Summit on Financial Services Supporting Rural Revitalisation, attended by directors from major commercial banks and prominent insurance companies, Yu promised a series of policy moves in coming months, including
- ‘Guidelines on financial services to support rural revitalisation’ from People’s Bank of China (PBoC)
- ‘Agricultural insurance high-quality development plan’ from Ministry of Finance
- new ‘Assessment and evaluation measures for financial institutions on performance in supporting rural revitalisation’
Rural residents’ access to financial services needs improvement, says Lin Jingzhen 林景臻 PBoC vice president, predicting booming demand for financial services driven by supply-side structural reform, land reform and development of the online economy.
Yin Jiuyong 殷久勇 China Agricultural Development Bank vice president says huge demand for new financial channels will be driven by rural infrastructure construction and upgrading, efforts to improve rural living environments, and stricter ecological governance. As rural collective assets and industrial capital are brought to bear, he says, more finance will be needed.
Rural and agricultural finance is characterised by high risks, high costs, management challenges and low efficiency, says Shao Zhibao 邵智宝 China Postal Bank vice president. He suggests optimising performance evaluation mechanisms, increasing service capacity and expanding financial service coverage.