CRI听力:Rural Banking High on Boao's Agenda

The Annual Conference of the Boao Forum for Asia held its first discussion session on Thursday afternoon.

For the first time, issues of China's inclusive approach to international finance and rural banking were high on the official agenda. CRI's Min Rui has more.

After ten years of rural banking reform in China, the rural economy has made considerable progress.

But the economic development of rural areas has been relatively slow when compared to that of urban areas.

In order to gain a better understanding of China's ongoing rural financial reforms, a focus group selected four typical areas in Hainan, Jiangsu, Shanxi and Zhejiang to evaluate the effectiveness of rural financial reforms. The group also aimed to uncover the segments in which the rural finance system needs to further improve.

The outcome of a study Report on Development of Rural Finance 2015 was published at the first discussion session of the Boao Forum.

In the report, Hainan Qiongzhong's experiment was highlighted as a successful example of rural finance reform.

Wu Weixiong is the head of Hainan Rural Credit Cooperatives Union

"More than 60 percent of the farmers in Hainan Province have access to small loans, 10 percent more than in other places. The average interest rate is between 7 percent and 8 percent, the highest is 15 percent. What's more, the Hainan government provides a no less than 5 percent discount on the compounded interest. Thus the farmers only need to shoulder a very low interest rate, which leads to a generally widespread willingness to take advantage of the loans."

The latest round of rural financial reform kicked off in 2003 and the following decade saw rural financial institutions diversify increasingly over time.

Lv Jiajin is the head of Postal Savings Bank of China.

"We rank among the top worldwide when it comes to the size of small loans. It is the small loan business that makes us among the top. This runs contrary to the older image attracting deposits, but without complementary lending. The small loan business laid the foundation for us to transition from a deposit and remittance institution to a commercial bank."

More loans and low interest rates from the bank are not the only things that are needed. Interest subsidies from the government are also considered to be an important part of the support of rural development.

Wu Xiaoling, Dean of the School of Finance at Tsinghua University, is promoting a new rural household responsibility production mechanism with support from the government.

"The only way forward for rural development is to move towards a more economically efficient form of production. Under the current land ownership system in China, separated farms won't be a good idea to promote. Things are more likely to succeed if we put farmers in a household responsibility production mechanism that takes advantage of the government's financial support and technical support."

Earlier this month, China's banking regulator urged financial institutions nationwide to channel more financial support to rural areas to help modernize the agricultural sector.

For CRI, I'm Min Rui in Boao.