Officials in Jing'an County of eastern Jiangxi Province have established a loan approval system that rewards "ethical" peasants with higher rural loans.

The scheme is to promote moral standards among farmers while providing capital to cash-thirsty areas for rural development.

Rural families' moral standards are classified into five categories by special ethical appraisal village committees and local credit cooperatives.

Households are labeled as those with "noble credit," "good credit," "qualified credit," "not good enough credit," or "without credit."

The grading of farmers' integrity varies in accordance with the 100 criteria issued by the county government.

Criteria include: "family members take the initiative to practice family planning," "respect elders," and "are willing to help others."

Households with "noble credit" can borrow a maximum of 50,000 yuan (US$6,024) without a guarantor from the rural credit cooperative, a financial institution that grants 80 percent of China's loans to farmers.

Officials say "model households with credit" can also enjoy an interest rate cut between 10 and 30 percent less than the normal level.

Rural residents' net per capita income in 2002 was only 2,476 yuan (US$299.13), with peasants' monthly disposable income reaching mere 120 yuan (US$14.5).

Officials say the move is aimed at changing the deeply rooted notion that morals are "pleasant but of no use to farmers."

Though the integrity rating has made some farmers uncomfortable, most rural families seem to welcome it.

In the first four months of the year, the county granted 42 million yuan (US$4.83 million) of the pegged loans to 6,280 rural "model households with credit."

"The maximum amount I could borrow from banks was only 2,000 yuan (US$241.62)," said Tu De, a peasant who planted 3.7 hectares of fruit trees in Liantang Village, Renshou Town.

However, Tu got approval for a 10,000-yuan (US$1,208.11) loan after his family was named worthy of "noble credit" through a public appraisal in his village.

But Liu Chengwen, Tu's neighbor, was not so lucky.

The morals committee took a dim view of his water and electricity fee arrears and he did not qualify for a loan.

"I felt ashamed when my seven-year-old son asked me why our family could not get loans and a certificate," Liu said.

Farmers say a glance at how much a family can borrow from the credit cooperative easily reveals the ethical levels of households.

All farmers who received credit loans have kept up with their loan repayments, according to Liu Yadong, director of the county's joint credit cooperative.

(Xinhua News Agency August 1, 2003)