Underdeveloped, great potential
Yin said it wasn't just that there was a shortage of banks in rural China: it was also that much of the savings in such areas flowed to the cities. He said this had created a void in the rural area, as banks used deposits from farmers to lend in cities.
Tsinghua University in Beijing has estimated the capital gap in the rural financial market at 1 trillion yuan in 2008, and China Development Bank has forecast the capital gap in rural areas would hit 5.4 trillion yuan by 2010 and 7.6 trillion yuan by 2015 if the situation didn't improve.
![Underdeveloped, great potential [CFP]](http://images.china.cn/attachement/jpg/site1007/20090424/00016c8b5de90b5b5a5b60.jpg "Underdeveloped, great potential [CFP]") |
| Underdeveloped, great potential [CFP] |
Tsinghua researchers have also found that in 2008, about 120 million rural households needed loans but 60 percent were able to borrow. Only about half of rural agricultural enterprises could get bank loans.
China has been trying to channel lending to the countryside to boost rural development and narrow the growing urban-rural income gap.
The moves it has taken to accomplish that goal include the regulatory changes by the CBRC in 2006, which allowed investors to set up new types of rural financial institutions such as township and village banks and rural mutual cooperatives.
Also, in October, the Communist Party of China (CPC) Central Committee issued a directive during the Third Plenary Session of the 17th Central Committee on steps needed to establish a modern rural financial system. It encouraged the creation of more new types of rural financial institutions to provide small loans and more financial services tailored to rural needs.
As of the end of 2008, there were 105 new rural financial institutions, which included 89 village banks, six lending companies and 10 rural mutual credit cooperatives, according to the CBRC. Most of those were in western China's least-developed regions.
Among the 105 institutions, 77 were in un-banked and under-banked areas.
These new financial institutions had extended loans of 3.97 billion yuan by the end of 2008, of which 96.8 percent went to rural enterprises and households.
