State banks retreat
In the late 1990s, major state banks started retreating from rural areas, closing outlets after failing to turn a profit. Those areas were also growing very slowly at the time, compared with big cities and the east coast, and state banks were also being restructured.
![China's rural market attracts foreign, domestic banks [CFP]](http://images.china.cn/attachement/jpg/site1007/20090424/00016c8b5de90b5b59d721.jpg "China's rural market attracts foreign, domestic banks [CFP]") |
| China's rural market attracts foreign, domestic banks [CFP] |
The state banks instead sought to expand overseas to upgrade their competitiveness. As they pulled out of rural regions, they left behind mainly rural cooperative banks and postal savings banks.
Li Jing, a researcher at the Central University of Finance and Economics in Beijing, said their move worsened the situation.
As of the end of 2007, 2,868 counties or villages in China had no financial institutions, accounting for 7 percent of the total number of counties and villages, according to the People's Bank of China (PBC, the central bank).
Of that number, 2,645 counties or villages were in the western regions. Another 8,901 counties or villages had only one financial institution.
A report from the PBC showed that by 2007, the number of rural financial outlets nationwide had fallen by 9,811 from 2004.
But tough competition in over-banked cities and signs that rural areas are beginning to present opportunities for profit have led some domestic banks to take a second look at neglected rural regions. They've also noticed that foreign banks are moving into rural regions.
