Abstract
With the rapid development of the Chinese economy and the increasing importance of rural finance, the rural financial market has become an important part in Chinese economy and financial system. The purpose of this paper is to analyze the situation of the rural financial market in China including its current structure, problems and existing measures taken by the government. Through the research, the paper explains that the rural financial marketing need to be changed and improved in economic structure and financial products, human resources and technical support, in order to make long-term development of rural finance.
Introduction
At present, China is in the primary stage of industrialization and modernization, and rural economic and social development is still in the starting stage. According to the 12th Five-Year Plan of China for Rural Development, the reform and development of rural finance should be made to promote the progress of the rural economy, improve the rural economic structure and social security level and improve the villagers’ livelihood. Therefore, Rural financial markets have become an important part in Chinese economy and financial system.
Current Situation of China’s Rural Financial Market
Structure of Rural Financial Market
The rural financial market is comprised of four major components including government, policy banks, industrial and commercial banks and public financial institutions.
Government: There are two parts of government financial management in the rural financial market. On the one hand, government offers financial subsidies and investment to the rural economy, helps with the construction of the rural finance infrastructure, invests in and supports some public services such as public interests and public project. On the other hand, government adopts macro-control measures to increase the stability of the rural financial market.
Policy Banks: Policy banks are important financial institutions in China. They implement the monetary policies of the Chinese government, inject capital into the financial market, invest and support rural economic development, and help solve the finance problems in the rural areas. They are also important organs in the rural financial market.
Industrial and Commercial Bank: Commercial and industrial bank is an important part of the banking system. It not only provides financing services such as deposits and loans, but also provides other services such as cash services and foreign exchange services. Compared with the past, the commercial bank has broadened its service, innovated its business and strengthened its risk management, which has greatly enhanced its financial support for rural economy.
Public Financial Institutions: There are numerous public financial institutions in China. They mainly invest in public goods and public projects in the rural areas, provide small- and long-term capital for the development of the rural economy and help to reduce the fund-raising cost of the rural enterprises.
Problems of Rural Financial Market
In spite of its current situation, it can’t be ignored that rural financial market still has some severe problems.
Firstly, structural problem. There are too many traditional financial products and non-standard financial institutions in the rural financial market while there are few financial products fit for the rural areas.
Secondly, human-resource problem. Most rural financiers are lack of professional skills and knowledge and their professional level needs to be improved.
Thirdly, infrastructure problem. The rural financial infrastructure construction is relatively backward, lacking of a relatively perfect legal system and remittance process.
Existing Measures
The Chinese government has taken several measures to promote the reform and development of the rural financial markets in recent years.
First, it establishes a sound rural financial system. The government has established a complete legal system with the regulatory authorities and prefectures for managing the rural financial markets and controlling the risks.
Second, the government encourages innovation in the rural financial markets. Various innovations such as financial products and methods, information systems and technology have been made.
Third, the government supports various financial institutions providing loans for the rural areas. Financial institution such as policy banks, industrial and commercial bank and public financial institution has been supported by the government to purchase peasant debt, invest in infrastructure in rural areas and provide loans for urban-rural economic development.
Conclusion
In recent years, the development of rural financial market in China has been greatly improved, but problems still exist. It is suggested that the reform of the rural financial marketing should be further strengthened, the economic structure of rural finance should be changed, the variety of financial products should be increased, the human resource should be improved and the infrastructure of rural finance should be developed. It is necessary to promote the long-term development of rural finance and promote the balanced development of urban and rural economy.
