Changes And Reconstruction Of Chinese Rural Financial System

As many research work done abroad and inside our country show, financial system is playing an important role which advances the development of the economy. But the strategies that developing countries have adopted such as paying great attention to the development of cities and industries, interfering the financial events of the rural area, together with systematically lacks of countryside financing, have not made the rural financial system prop the development of countryside up. On the contrary, they in most cases stand in the way of the increase of income and development of suburbs. So that, the research of the transition and reconstruction of the rural financial system has become a challenge that developing countries are faced with. Similarly, the reconstruction of rural financial system is as well an urgent problem that should be solved in our country as respect to financial reformation and rural economical development.The development of rural financial system in our country is carried forward under two different functions of two different fields. Firstly, it is the formal financial area which is organized and fostered in the procedure of economical and financial reformation. It has financial activities organized by formal financial organizations. Secondly, it is the non-governmental financial area which is naturally formed. The two parties who play the roles of supply and demand of money do the deal directly or intermediated by informal financial organizations. In this article, a deep going analysis about the history, the present situation and the reason to form that is done in both the formal and informal respects. A conclusion is drawn that erogeneity is the main reason of the unsoundness of rural financial system.After the establishment of People' Republic of China, a strategy of taking advance in heavy industry development has been followed for a long time. As a part of traditional planned economy, financial system is assigned to follow the strategy. In the countryside of our country, credit units developed from civilly owned to officially owned and finally became to basic organizations of national banks. As a national and professional bank, Agriculture Bank of China, which concentrates its main business on agriculture credit, has experienced many changes like four times' establishment and three times' cancel. The government has put much innovation on rural financial system after the open and reform policy was carried out. Some effects can be seen. A rural financial system in whichrural-corporate finance, agriculture-policy finance and commercial finance co-exist has been formed. But the effect is mostly superficial. The rural financial system seems to be flawless, but substantially speaking, the rural financial organizations are faced with difficulties in operation. Together with great lost, increasing risk and low benefit, it cannot have an effect on improving the development of rural economy. Moreover, rural financial organizations have become a bridge of cash flow from suburb to city. In the rural area, financial organizations accept deposits but are not willing to lend loans to farmers, middle or small enterprises, so that lots of funds flow to city by formal ways and this made the situation of lacking funds more serious. Credits of farmers, middle and small enterprises depend more on informal financial functions. Informal financing are more important than formal one in the rural area. Through the analysis of supply and demand on rural financing, a judgment of financial restraint, which is the present situation of rural financial system, can be made. So, the key of carrying forward and reconstructing rural financial system is to solve the problem of financial restraint, which is universally exists in the rural area.First, we discuss the thoery of the rural finance on the view of Chinese ancient financial thought, Maxism Economics and west Economics. On the basis of the analysis of the history and present situation, the core of rural financial system in our country (system transition, quit of nationalized commercial banks, property right system of suburbs' credit units and informal financial problems) has been economically and theoretically studied.The experience that foreign countries succeeded in rural financial system should be studied. In this article, the successful experience of rural financial system held in three countries, France, America, Japan one province, Taiwan Province of our country and four Asian rural financial organizations have been discussed, and this gives us a revelation.After the discussion of the history, present situation of rural financial system in our country and the experience of foreign countries, the theoretical substratum target choosing are expounded. Three problems should be solved when concerning the reconstruction of rural financial system. First, is the property right system, that is, how to rationally allocate ownership, domination, and usufruct of financial organizations among each sentient agent, and this is the key to the success of rural financial organizations. The second one is how the government and the market reasonably position in the course of suburbs' financial system.. The third one is the realization of the transition from exogenous to endogenous of suburbs' financial system. On the basis of four principles, constructing a diversified and compound suburbs' financial system, which is mainly consists of middle and small financial organizations. Using the framework, evaluate the work that has been done to...