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The Recent Development of Rural Cooperative Finance in China: Models, Features, Challenges and Countermeasures Zhengping ZHANG and Chunhui MU1
Introduction2 If 2003 was regarded as the boundary year, the development of rural cooperative finance (RCF) in China could be divided into two types: first, the traditional RCF, which could be subdivided further into formal rural financial cooperation (e.g., the rural credit cooperatives or RCCs) and informal rural financial cooperation (e.g., the rural cooperative foundations, or RCPFs); and secondly, the modern RCF. With the alienation of RCCs to commercial finance as well as the clampdown of RCPFs, the traditional RCF in China came to end in 2003. However, this does not mark the disappearance of the RCF in China. After 2003, a variety of RCF innovations and practices boomed in rural Chinese areas, which will be detailed more extensively below.
The Development and Evolvement of Traditional RCF in China The Emergence, Development and Vicissitude of RCCs During the period from 1949 to 1958 – which marked the first decade of the foundation of the new China – RCCs maintained their cooperative nature. Unfortunately, in the next 20 years – from 1959 to 1978 – RCCs gradually became state-run institutions. In the early period of the 1980s, RCCs were managed by the Agricultural Bank of China (ABC) and made a big step forward to the cooperative financial organization, which could operate independently and assume sole responsibility for its profits and losses. However, according to the document Resolutions on the Reform of Rural Financial System of the State Council issued in December, 1993, RCCs were clearly separated from the ABC and were then regulated and managed by the People’s Bank of China (PBC), based on cooperative principles. As a result, RCCs were gradually transformed into rural commercial financial institutions. Especially after the deeper reforms of 2003, the nature of RCCs as cooperative financial institutions was soundly abandoned due to the emergence of new management systems and the diversification of property rights organization; thus, RCCs became completely commercial banks. The Amazing Power of Cooperatives
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Xie (2001) attributes the reasons behind the dramatic alienation of RCCs mainly to deviations from the nature of cooperative finance such as: the imperfection of the rural financial system, the transformation of RCCs’ organizational models, the chaos of industry management systems, the malfunction of bankruptcy mechanisms, moral risk, goal conflicts, heavy historical debt burdens and unsound government intervention. The Emergence, Development and Banning of RCPFs From 1984 to 1986, the rural cooperative foundations (RCPFs) emerged from the internal financing activities in Heilongjiang, Liaoning, Hubei, Zhejiang and other provinces. Due to their positive impact on rural farmers and agricultural development, RCPFs have received tremendous welcome from farmers and great support from local governments. In 1987, some standardized experiments on RCPFs were carried out one after another in Shangzhi city in Heilongjiang province, Yutian County in Hebei province and including other areas. RCPFs immediately presented positive momentum for development. During 1992 to 1995, RCPFs expanded all over China with at a rapid pace because of their favorable organizational structures, lower operating cost, and their exemption from the formal supervisory system. Consequently, before 1996, the year of closure for RCPFs, there were as many as 21,000 county-level and 24,000 village-level RCPFs in the whole of China with 150 billion RMB in loans. However, along with their fast expansion, the negative impacts of RCPFs came into being: financial disorder and bad loans, among others, which inevitably brought about a heavy rectification from governments. In January of 1999, the State Council of China officially announced the nationwide ban of RCPFs. The RCPFs were given three closure choices: merge into RCCs, compulsory closure or voluntarily closure (Wen, 2009). The failure of the traditional RCF (RCCs and RCPFs) indicates that rural finance based on a pseudo-cooperation system was unable to meet farmers’ needs and naturally failed to root itself in rural areas (Jiang, 2005). Only if rural cooperative financial organizations are born inside a rural economy can RCF solve the problem of “insufficiency of available financial supply” in a timely and effective manner in China (Zhang, 2008).
The Emergence and Development of New Models of RCF in China Though the two traditional RCF models failed, it is not logical to assume that rural areas in China do not require cooperative finance. Instead, practices and innovations of new RCF models have boomed since 2003. There are three typical types: the poor villages’ mutual financial cooperatives, the rural loans cooperatives of Puyang and the rural mutual financial cooperatives.
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The Emergence and Development of PVCs The poor villages’ mutual financial cooperatives (PVCs) were lead by the Poverty Alleviation Office of the State Council and the Ministry of Finance of China, managed by the Poverty Alleviation Office and the Finance Bureau of local governments. They aimed at providing direct financial services for poor households. Specifically, PVCs service agricultural production according to the rule, “of the people, by the people, for the people, and circulating usage”. This is intended to build up a kind of rural cooperative financial institution with a long-term mechanism for generating funds and alleviating poverty in China. At the beginning of 2006, Ningxia province became the first PVC pilot area in China, and in May, 2006, 140 villages in 14 provinces had launched pilot work for PVCs. By the end of 2007, the pilots further expanded to 270 villages in 27 provinces, and as a result, by the end of 2008, a total of 4,122 poor villages in 28 provinces had established the new mutual financial cooperatives, and PVCs developed even more rapidly during 2009 and 2011. The Emergence and Development of the RLC The rural loans cooperatives of Puyang city (RLC), regarded as the “Puyang model”, are a new type of RCF created in Puyang city in Henan province. The RCL were designed jointly by the Poverty Research Center of the Chinese Academy of Social Sciences (CASS) and by Xu Wensheng, the president of RLC. In December, 2004, the Poverty Research Center of CASS got in touch with Puyang’s municipal government, marking the official beginning of the RLC. On May 1, 2005, the experimental work of the RLC formally started. On July 6, 2006, the RLC was registered as a juridical association in the Bureau of Puyang Civil Affairs and ultimately obtained legal status. In 2007, with the approval of government, the RLC began to march toward towns and established two branches in urban areas of Puyang. From 2008 to the end of July, 2010, three branches of RLC were set up in Shiying, Wuxing and Qingfeng. Another contribution is that, up to July of 2011, RLC had helped to launch 29 new specialized cooperatives3, covering 8 towns of Puyang city. The Emergence and Development of RMFCs According to the Interim Provisions on the administration of rural mutual financial cooperatives issued by China Banking Regulatory Commission (CBRC), the rural mutual financial cooperatives (RMFCs) are approved by the CBRC, and its capital is drawn from the voluntary investment of farmers, rural small businesses in townships; and serves members with deposit, loan and settlement needs. In July, 2004, the first small-sized RMFC, Baixin RMFC, was established in Lishu town of Jilin province. Its predecessor was The Amazing Power of Cooperatives
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the Baixin specialized cooperatives founded in November, 2003, in Yanjia country. In December of 2006, CBRC released its Provisions of Adjusting and Relaxing Access to Rural Areas of the Banking Financial Institutions, which clearly proposed to carry out pilot work of the three new rural financial institutions (RMFCs, village and town banks and loans companies), marking the beginning of formal RMFCs. On January 22, 2007, CBRC further introduced Interim Administrative Regulation on the Rural Mutual Financial Cooperatives and Guidelines of the Formation and Approval of the Rural Mutual Financial Cooperatives. On February 4, 2007, it introduced Model Regulations for the Rural Mutual Financial Cooperatives, and these three documents provide a clear policy framework for the pilot work of RMFCs. Under the guidance of the above policies, Baixin RMFC officially received its license on March 9, 2007, which formally indicated the birth of a new rural cooperative financial institution in China. On October 12, 2007, pilot areas of RMFCs expanded from 6 to 31 provinces in China. The development of RMFCs sped up, for instance, numbers have increased from 26 in June 2010, to 46 in December 2011.
Features of the New RCF in China: Comparative Analysis Although the new cooperative finance models in China are still under-developed, the three new models of RCF have showed good development momentum. In fact, the three new models differentiate themselves from one another nicely. We will clarify these differences by comparing three key aspects: scale, operating mechanism and performance. Scale In terms of scale of the three models of RCF, we make comparisons from the total number of institutions, the total number of clients and the size of loans (Table 1), and we can easily draw the following conclusions: Regarding the number of institutions, PVCs come first and are followed by the RLCs, while RMFCs rank third. PVCs have developed rapidly due to vigorous promotion from the central government, and their average annual increase reached over 4,000 between 2008 and 2010. The self-help center of RLC experienced a similar increase during the same period, and its average annual increase is 150. Although RLC paled in comparison with PVC growth, their development speed is still credible because of their restricted area and the lack of government backing. The RMFCs’ average annual increasing number is only about 10; however, what is worth noting is that in the vast rural areas of China, there are thousands of community organizations which are not officially approved but are like RMFCs in nature4, and certainly these informal RMFCs cannot be ignored. Regarding the number of clients, PVCs have outdistanced the other two models by a long way. According to Table 1, the number of clients of PVCs reached 1.094 million by the end of 2010. Meanwhile, the clients of RLCs increased 10 times in three years from 926
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in 2008 to 10,008 in 2010. Drawing from the data of Cangxi RMFC, we are still able to conclude that RMFCs develop more slowly than the other two models. Regarding the size of loans, PVCs far dwarf the other two models in the amount and the growth rate of loan balances. As Table 1 shows, the loan balance of PVCs increased from 310 million in 2007 to 2,524 million RMB in 2010, which means the loans of PVCs multiplied 7 times over 3 years. In the same period, the RLC loan-base rose from 11.68 to 74.29 million and Cangxi RMFCs from 1.32 to 6.3 million. Operating Mechanism In terms of the operating mechanism of the three models, we will make comparisons between four key aspects: funding sources, loan orientations, organizational forms and risk control. We obtain the following conclusions as presented in Table 2. Regarding funding sources, the three models differ from each other in important ways. For PVCs, the relief fund from government comprises a majority of their funding, while deposits from members and shareholder capital from investors are the main sources of funding for RLCs and RMFCs. Moreover, RLCs have diversified funding sources by attracting capital from investors abroad and internal members. RMFCs, as formal financial institutions, can receive finance from other financial institutions—for example, banks. Regarding the loans’ orientation, the three models all mainly focus on intraorganizational loans, providing financial services typified by small amounts on a short-term basis with frequent trading to the rural low-end market. The difference among them is that the loans’ orientation of PVCs is very clear, only focusing on production needs and lives of internal members, while the RLC offers a green light to small and micro-enterprises, aiming at expanding its city business since 2009. With that said, most of its loans go to the “agriculture-countryside-farmer”. Though RMFC funds can be used for capital market investment—for example, offering loans to banks or purchasing government bonds—the majority of loans are used by organizations because of severe fund shortages. Regarding their organizational form, all three models have a relatively well-developed, top-down organizational structure, barring a few slight differences. Firstly, PVCs and RMFCs both have a board of supervisors along with council and member meetings that operate along “one person, one vote” lines. Yet RLCs have the former but no “one person, one vote” system because it does not hold regular member meetings. Secondly, PVCs are deeply rooted in the internal rural community and rely upon village-level organizations, so it is beyond doubt that administrative forces upon PVCs are much more powerful than the other two models (Guo, 2009). By contrast, instead of being limited to village-level organizations, townships or towns are often regarded as minimal units for RLCs and RMFCs. The Amazing Power of Cooperatives
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Regarding risk control, the three models have all tried to control credit risk. Their successful approaches can be summed up as follows: most of their loans are “small and short-term” and the term is generally 3-6 months while the longest term would not exceed one year, hence the recovery rate of loans is quite high. Besides, the “joint guarantee system” of loans further lowers the risk of default. Performance In terms of performance of the three models, our comparisons review four aspects: average loan amount of per client, interest rate of loans, coverage and profitability (Table 3). Our findings are as follows: Regarding the interest rate of loans, clients have faced different interest rates with different loan terms, but there is little difference in the same term for the three models. As we can see in Table 3, the interest rate of PVCs is the lowest, RLC is slightly higher and RMFCs (Yimin RMFC of Cangxi) are the highest. It is worth noting that, for the three models, their interest rates of loans are 2-3 times higher than the benchmark interest rate of PBC. Regarding coverage, two separate indicators were examined: the coverage of organizations (nationwide) and the coverage of members (in a community). First, with respect to the coverage of organizations, PVCs and RMFCs have the broadest coverage, as the former has covered 21 provinces and the later 31 provinces; the RLC is still limited in Puyang City. It should be noted that, compared with 34,170 townships and 592 poor villages in China, the overall coverage of the three models is very unsatisfactory; as for the coverage of members, PVCs and RMFCs hold a higher proportion of community membership. Regarding profitability, only RLC gained complete financial sustainability by the end of 2011. PVCs and RMFCs did not have optimistic earnings. RLC transitioned from major losses to profits in 2009, and although the profit situations of the other two models differ across the country, in general we can tell that they have not realized comprehensive profit. To sum up, in terms of scale, PVCs were superior to the others; RMFCs are superior to the others in terms of the operating mechanism; RLC does best in performance. The overall impact of the three new cooperative financial institutions is quite positive and striking: they not only have filled the blank when it comes to financial institutions and its branches in rural areas, but they also effectively meet some rural credit demands. In addition, they are playing an important role in promoting the formation of a competitive rural financial market in China. Compared with the huge demand in rural China, the years ahead will probably see rising prospects for the three models.
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Challenges of the New RCF in China Although the three new cooperative financial institutions have a significantly positive impact, the new RCF in China still faces great challenges from the perspective of sustainable development. Lack of Law for the RCF So far, China has not yet introduced national-level laws for the RCF. Operations of the three new cooperative financial institutions only relied upon a few scattered departmentlevel rules and regulations by the end of 2011, lacking systematic formulation about the nature and legal status of the RCF. For instance, RMFCs are legitimate financial sector actors according to the existing rules of CBRC, while PVCs and RMCs are not yet. The ceaseless changes of RCCs in China over the years can be mainly attributed to legal constraints (Wen, 2006). There are three main reasons can explain this dilemma: first, as newly born institutions, the influence of the three new models in the rural financial market has not yet attracted sufficient attention from the central government, causing little driving force behind the Law of the Rural Cooperative Finance; second, since the new cooperative financial institutions are still in their primary stage of development and the understanding is that they will not unite, theoretically means that there will be divergences in the formulation of law; finally, these new cooperative financial institutions do not have unified forms and industrial standards, which results in tremendous difficulty and challenges for legislative implementation as well. Shortage of Funds Like the early years of rural microfinance, the three new models face an evident embarrassment—shortage of funds. As we have seen, the business scope of the PVCs is restricted to administrative villages, and fiscal funds from government remain the main source of capital since their inception5; for instance, if these fiscal funds were to be taken away, PVCs would face huge liquidity risks. Moreover, the RLC of Puyang will also undergo tremendous financial pressure upon attracting more clients in the future, despite enjoying better profitability rates at present. Lastly, in practice, what has been drawing great attention is that some RMFCs have been trapped in the plight of “no money to offer loans”. For example, on June 1, 2007, due to payment risk caused by a shortage of funds, the first township-level RMFC in China—Xingle RMFC—was closed by the Haidong branch of CBRC in Qinghai province, when it was just 100 days old. Two reasons must be mentioned here. On the one hand, it is a lack of money that compels members of rural cooperative financial institutions to join these organizations; so needless to say, the idle money in their hands is seriously inadequate. The new The Amazing Power of Cooperatives
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cooperative financial institutions can only receive a little from their members. On the other hand, due to their small size, low credibility, long investment cycle and low returns on agricultural projects, there is little enthusiasm among strategic partners in participating with the new RCF. Deficiency of Operating Mechanisms There are evident drawbacks within the operating mechanisms of the new RCF, which manifest themselves as follows: firstly, the governance mechanism is imperfect. In the case of member meetings serving as the top authority, they remain merely nominal powers; actual decision-making power is highly concentrated within management. Secondly, the exit mechanism of shareholders has its disadvantages. One fact is that the Interim Administrative Regulation on the Rural Mutual Financial Cooperatives stipulates that “all who demand of withdrawal shares should apply to the council three months (farmer members) or six months (micro and small businesses) in advance and go through the withdrawal procedure with approval”. This provision however, clearly does not conform to the “join voluntarily, exit freely” principles of cooperative finance, and farmers will not receive this enthusiastically. Thirdly, low borrowing multipliers can be an obstacle for members in need of large-scale capital (He, 2007). For example, the borrowing multiplier of RMFCs generally cannot exceed ten times its holdings, and that of PVCs and RLC is five times in most cases. The major reasons can be summarized accordingly: first, the lack of laws and regulations make their operating mechanisms “inherently constrained”. Second, the new RCF is set up on grassroots foundations, so the public’s embrace of governing laws and risk management philosophies remains relatively weak (Guo, 2009). In the end, the slightly poor training of some managers and employees in the three rural cooperative institutions leads to their misunderstanding of corporate governance and risk management. Imperfection of Supervisory System To begin with, external regulatory bodies are unclear. On one hand, local governments assumed market access and supervision of PVCs and RLCs, but civil affairs departments also give approval to their entry and exit, which of course blurs regulatory boundaries. On the other hand, in accordance with the Interim Administrative Regulation on The Rural Mutual Financial Cooperatives, CBRC shall supervise on RMFCs, but it is also stressed that rural mutual financial cooperatives, finance companies, village banks and small finance companies “should submit the balance sheet and other relevant statistical information to the local branches of PBC on a quarterly basis,” which indicates that PBC and CBRC are both regulatory bodies over the RMFCs (Zhao, 2010).
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The internal regulatory framework is also not clear. In RCF’s early stages, due to its low membership rate, narrow business scope and a poor amount of business, it is rational that all matters are decided by member congress to reduce costs as much as possible (Xue, 2009). However, this vague internal regulatory framework will inevitably result in the failure of adopting the right balance of operating mechanisms and will go against the sustainable development of the new rural cooperative financial institutions.
Suggestions of Promoting Sustainable Development of RFCs in China Based on the analysis about the three new models of rural cooperative financial institutions, measures should be taken to promote good long-term planning of RCF to propel it forward in a healthier fashion. Perfecting Legal System International experiences suggest that, countries who have well-developed RCF all ensure it’s running in a steady and orderly way by definite laws6. Hence China should start the legislative process as soon as possible and make Law of the Rural Cooperative Finance completed. Building up a multi-level legal system: it is impossible to integrate all the models into a single law, as there are lots of critical differences, as elaborated above. Standardization must “fine-described rather than coarse described” (Fan, 2007) on the foundation of “cooperative principles”.7 More specific laws must be made according to the actual situations across vast areas of China, entrusting local governments appropriate legislative power to form a multi-level legal system. Clarifying the position of RCF: as seen in Table 2, PVCs and RLC registered at the bureau of civil affairs are social corporations, while RMFCs are financial institutions registered at industrial and commercial bureaus. That is to say, although they essentially belong to cooperative financial institutions, their market positions and social attributes are different, which stands as a roadblock to their long-term development. Therefore, China should create legislation to define their market positions, gradually altering all of them into cooperative financial institutions approved by CBRC and registered in industrial and commercial bureau. Broadening Funding Sources Raising the minimum registered capital advisably: cooperative financial institutions can better solve the problem of funding shortages and enhance their ability to withstand business risk. As far as China is concerned, increasing capital can be achieved not only by additional mutual aid money, but also with more government funding. Supplementary appropriations and “soft loan” assistance from the Agricultural Development Bank of China will be the most plausible and feasible way to do so at the moment for PVCs, RMFCs and RLCs. The Amazing Power of Cooperatives
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Promoting finance from banking financial institutions: encourage built-in mechanisms between cooperative financial institutions and banks. For example, conditions can be created for banks to provide preferential wholesale financing to the former. Expanding cooperation with other institutions: RLCs and RMFCs can fully combine with specialized cooperatives. Learning from the successful case of “unity of two associations” in Fengyang, Anhui province, tests can be done to link production cooperatives and capital cooperatives, and in this way the two can foster counterparty surveillance and common development (Wang, 2010). Improving Operating Mechanisms Improving corporate governance structures: one priority is to insist on “voluntary open cooperation” and thus ensure members’ rights of joining and withdrawing freely. A second important point is to optimize the member congress system—aiming at giving members real rights to participate, to speak and to know—by implementing members’ democratic management and sticking to the “one person, one vote” principle. When it comes specifically to China, PVCs should mainly focus on prevention of excessive administrative intervention from local governments that may be against the rights of members and the board of directors, while RLCs and RMFCs should pay more attention to whether the “one person, one vote” system can be valid and effective in their process. Strengthening the risk control mechanism: enhancing the quality and ability of employees can be meaningful to internal risk control. An effective training system is in urgent need, along with intensive training for employees—particularly training on credit systems and regulatory policy. Yet another need is tracking the borrowers and their loan usage in a timely manner to express useful information on risks. Strict examination and approval systems should be perfected, and further steps are needed with respect to loan control during the whole process—pre-credit, in-credit and postcredit. Finally, risk buffering mechanisms are necessary, which require both a risk provision system and raising the pre-tax risk provision rate in order to improve the ability of resisting risk. Improving product innovation: firstly, a flexible loan multiplying mechanism should be set up. Agricultural production is obviously a seasonal activity, so a loan multiplying mechanism for new RCF should be elastic enough: in sowing season and harvesting season, higher multiples can be set because of a general increase in demand for funds. Secondly, improve targeting of rural credit products and diversify them based on characteristics of farmers’ loans in China’s rural areas. These loans tend to be small, seasonal, frequent and lacking collateral.
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Perfecting Supervisory Systems Setting up multi-level external supervisory systems. The supervisory bodies and purpose of each organization should be explicit and written into law. In the current reality of China’s RCF market, the four coordinated multi-level regulatory systems for RMFCs include the CBRC, the PBC, local government departments and as well as members. It is critical to clarify the responsibility and obligations of all four, and avoid overlap supervision or vacuum supervision. Otherwise, PVCs and RLCs should gradually establish their legitimate financial institution status in order to receive formal supervision from the CBRC and PBC. Finally, self-discipline within the rural cooperative financial industry needs to be enforced, along with self-discipline between peers. Build internal regulatory frameworks with checks and balances upon the board of directors, board of supervisors and the member congress. This must, at the same time, reflect the principle of separation of duties. On the one hand, full play must be given to the internal regulatory role of the board of supervisors, adopting a means of placing equal emphasis upon incentives and penalties to effectively prevent the emergence of the phenomenon of “insiders control”; and on the other hand, paying attention to the regulatory role of members congress can help identify problems relatively quickly and clearly (Wang, 2010). The failure of traditional RCF does not mean that China’s rural areas do not need cooperative finance. Rather, it is proof that new rural cooperative financial institutions were needed. However, it must be noted that the three types of new rural cooperative financial institutions are still faced with enormous challenges. Their sustainable development requires legislation, supervision, financing and effective management.
Table 1: Comparison of the Development Scale of the Three Models
Source : Yang, L. (2011).
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Table 2: Comparison of Operating Mechanisms of the Three Models
Source: Yang, L. (2011) and Xu, W. S. (2011).
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Table 3: Comparison of Performance of the Three Models
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Notes Finance Department, Economics School, Beijing Technology and Business University. This paper is financed by the project of National Natural Science Foundation of China (No.71003022). About the authors: Zhengping ZHANG, Ph.D., Associate Professor in Finance Department, Economics School, Beijing Technology and Business University. E-mail:
[email protected]; Address: No.33 Fucheng Road, Haidian District, Beijing, School of Economics, Beijing Technology and Business University, Beijing, China 100048. Chunhui MU, Master Degree Candidate of Finance in School of Economics, Beijing Technology and Business University. 3 Specialized cooperatives are mutual economic organizations which feature voluntary union and democratic management, and serve as the producers and operators of the same kind of agricultural produce, and as providers and users of information and technology services in production. One big difference from RCF is that members of specialized cooperatives cooperate more closely in terms of production, while RCF cooperate more in funding. 4 This paper would only discuss the formal RMFCs approved and regulated by CBRC, but in fact there are over 5,000 informal RMFCs in China which were not approved and regulated by CRRC, see Bai (2010). 5 In the end of 2010, the total fund of PVCs is 2.624 billion RMB, of which fiscal capital is 19.59 billion RMB, farmers’ mutual aid money 535 million, other sources 130 million (Yang, 2011), and the fiscal capital accounts for up to 74.66%. 6 For example, Japan enacted its first cooperatives code Law of the Industrial Organizations in 1900, Britain passed Act of the Credit Cooperatives in 1979, and United States as well launched credit cooperative activities based on Act of the Federal on the Agricultural Loan, etc. 7 In 1995, the International Cooperative Alliance formulated seven cooperative principles: voluntary open, democratic management, “one person one vote”, members contribute and distributed according to volume, autonomous operation at its own risk, education and training, cooperation within the cooperatives and concerned about community development. 1 2
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Bibliography BAI, L. (2011). “The regulation of rural cooperative financial need to ‘reinvent the wheel”, China Business Newspaper, January 14. CAI, Z. H. (2010). “The developing status and policy options of the Poor Villages’ Mutual Financial Cooperatives”, Journal of Huazhong Normal University, No 4, p. 27-32. FANG, W. H. (2007). “Legal protection of China’s rural cooperative financial institutions reform”, Journal of Chongqing University, No 6, p. 90-93. GUO, X. M. (2009). “Innovation of rural finance-the exploration and development of village-level mutual financial cooperatives: an empirical analysis of Sichuan province”, Rural Economy, No 4, p. 3-6. HE, G. W. (2007). “The cooperative mechanism and performance of rural mutual cooperatives”, China Cooperative Economy, No 8, p. 3-8. NIAN, Z. Y. and N. MA (2009). “Defects of the new rural financial system in China and its promoting methods”, Economic Review, No 9, p. 86-88. WANG, S. G. (2010). “The plights in process of poor villages’ mutual financial cooperatives”, www.fcpmc.org/issuance/uploadpic/20101021165728401.ppt WEN, T. J. (2009). “The rise and ebb of the rural cooperative foundations”, Old Liberated Area Connstruction in China, No 9, p. 17-19. WEN, T. J. and B. L. JIANG (2007). “Return cooperative finance to farmers: suggestions on the reconstruction of rural financial system”, Rural Finance Research, No 1, p. 49-51. WEN, H. (2006). “A step further-legislation on rural cooperative finance”, Rural Credit Cooperative of China, No 2, p. 49-51. XIE, P. (2001). “Debates on the system reform of China’s rural credit cooperatives”, Journal of Financial Research, No 1, p. 1-13. XU, W. S. (2011). “Root in rural communities and forge inclusive finance: a study on the rural loans cooperatives of Puyang”, www.snzg.cn/article/2011/1208/article_26627.html XUE, Y. L. (2009). “Discussion on the construction of rural mutual financial cooperatives: based on the ‘mystery of rural finance’”, Financial Theory and Practice, No 7, p. 85-87. YANG, L. (2011). Pilots introduction of the poor villages’ mutual financial cooperatives, 2011 CAM Annual Conference & China Microfinance Summit, October, 18-20. ZHAO, Y. L. and Q. L. ZHANG (2010). “Probe in the regulations of China’s rural mutual financial cooperatives”, Rural Finance Research, No 6, p. 76-78.
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Summary Since 2006, the rural cooperative finance in China has gained vitality again and built up three completely new models of cooperative finance: the poor villages’ mutual financial cooperatives, the rural mutual financial cooperatives and the rural loans cooperatives of Puyang, which are markedly different from the mainstream rural financial cooperatives and have become a significant force of financial supply in rural regions. In this paper, we first compare and analyze the three new types of the rural cooperative finance in China, and then summarize its main features during its developing, then reveal the challenges of rural cooperative finance confronted during its development, finally give some suggestions to improve the three new-type financial cooperatives.
Resumen Desde 2006, las cooperativas financieras rurales en China han recobrado su vitalidad y desarrollado tres modelos completamente nuevos de cooperativas financieras: las cooperativas financieras de crédito mutuo para aldeas pobres, las cooperativas financieras de crédito mutuo para regiones rurales y las cooperativas de préstamos rurales de Puyang, que poseen marcadas diferencias respecto a las cooperativas financieras rurales establecidas y que se han convertido en una fuerza importante de financiamiento en las regiones rurales. En este trabajo, primero se comparan y analizan los tres nuevos tipos de cooperativa financiera rural de China y se resumen las características principales observadas durante su desarrollo. Luego, se abordan los desafíos que estas cooperativas han debido afrontar durante su desarrollo y, por último, se hacen algunas recomendaciones respecto a los tres nuevos tipos de cooperativa financiera.
Résumé Depuis 2006, les coopératives financières rurales ont repris de la vigueur en Chine et trois nouveaux types de modèles de financement coopératif ont été créés : les coopératives financières de crédit mutuel pour les villages pauvres, les coopératives financières de crédit mutuel pour les régions rurales et les coopératives de crédit dans les régions rurales de Puyang. Ces modèles sont très différents des coopératives financières rurales traditionnelles et ils sont devenus une importante source de financement dans les régions rurales. Dans cet article, nous comparons et analysons d'abord les trois nouveaux types de coopératives financières rurales en Chine et nous en décrivons les principales caractéristiques. Nous faisons ensuite état des défis qu'ont dû relever ces coopératives financières au cours de leur développement et, enfin, nous recommandons certaines améliorations qui pourraient être apportées aux trois nouveaux types de coopérative financière.
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