Analysis On The Policy Of Chinese Rural Credit Cooperation Reformation

In 2004, the author had an investigation and research on Rural Credit Cooperation (RCC) reforming of the city Gongzhuling,Jilin province, analyzing and discussing the reforming policy on RCC. In order to study public policy, the reforming of RCC in city Gongzhuling is a good case in China. Through the analysis and discussion on its reforming frame, the author tries to find out the cooperative financial system, which suits for China. From the theories and practices of RCC in Gongzhuling City, we can see the following questions: Confusion of cooperative business operation and collective ownership, deficiency in protection of commune members' property ownership, failure to set up a trade regulatory regime which conforms to the features of cooperative finance in time, deficiency of government in policy supports on cooperative finance and other problems put RCC into a fix. Through reformation for more than 1 year, the RCC of Gongzhuling City achieved a staged success as followed, financial risks have been settled preliminarily; operation has been improved in a large extent, management mechanism as well has realized the reformation from previous double grade juristic persons of city and town to single one and then to the cooperative bank which means the framework of new management and administration mechanism has mainly come into being. RCC reforming of China is a public policy concerning many aspects; its influences are also profound. From 1990s, there have been arguments about reforming direction. They are the road of stocking commercial and the road of improving cooperative system continuously. The former one took the dominant position. RCC of Gongzhuling City reflects that standpoint. Looked at RCC` s reformation effects of Gongzhuling City, it makes cooperation unified, it carries through the reform of rural cooperative bank. These steps are coherent to actually local condition. This reformation is not only alteration of accounting unit and the names of juristic persons but also a symbol of rural credit cooperative from the cooperation of small range to union of large range, meanwhile, a most important clientage in organization and administration of modern juristic person. The credit cooperatives has optimized the capital structure by increasing capital stock of RMB 61040,000 and subscribing for specialized item bill of RMB 91410,000 of Center Bank to solve the historical problems. The orientation of the credit cooperatives after reformation is still to serve agriculture, farmers, countryside and community. The reforming of RCC is not only an important content of Chinese rural financial reforming and development, but also an influential commitment in deepening rural economical reforming,developing rural economic and improving rural production relationship. Unavoidably, reforming would meet bigger contradictions and restrictions come into being for a long time. 1,In Chinese rural area, decentralized individual economy occupies the main position, and peasants are always the weak in the social economic activity. Cooperative finance commercialized so early that it merely aimed at profit increasing, which inevitably caused the fact that financial resources flew into the secondary industry and service sector which are low input but high out put. As a result, the credit cooperative had to be separated from agriculture, farmers and countryside and reduced the capital investment to agriculture that is high cost but low profit, which would make negative effect to agriculture and farmers. 2,During the procedure of RCC` s foundation and its continually transforming, there is strong administrative shades on it. From the design to its final actualization, peasants do not take part in it all along. And the peasants do not take RCC as their own mutual organization all the time. 3,The real credit cooperative business only exists in grass roots, and the skeleton cooperative financial form relies on community. The unitive cooperation which is associated with many villages and towns extends the boundary of cooperative financial form. 4,Central bank` s inpouring directly into RCC would cause fundamental money concentrated, the money will be a huge sum. If there is no other control on the concentration, it must be change into inflation in future. 5,The property right frame after reforming strengthen the function of associator` s representative conference,council and board of supervisors. Butno matter the associator` s representative conference or the shareholder conference which is converted into cooperative bank performs its highest policy decision. The decision is only a form. 6,For there is no special cooperative financial laws as safeguard, democratic management only a form in practice. Therefore, the cooperative right of farmers is hardly protected. The reforming and development of RCC in city Gongzhuling, Jilin Province is the epitome of Chinese RCC. In discussing its reforming effects, problems and difficulties, we can consider there are many fields to be improved in RCC program design and practice. The improvement has an important significance to be referenced in Chinese RCC reforming and development. Firstly, the reforming of RCC should be various in different regions and on the basis of cooperation. We clearly know cooperative system exists extensively in developed counties and developing countries. This phenomenon shows that cooperative system is not a backward economical system. Base on the fact that countryside generally scattered and its individual financial requirement, credit cooperative must focus on the consummation of cooperation and mainly aim at the service of agriculture, farmers and countryside. Secondly, the government can slacken the financial control of cooperative financial entered, and permit peasants to rebuilt cooperative form on the basis of cooperative system according to their financial needs. Only this kind of form in spontaneity can express the principle of democracy, equality, freedom and mutualism. Thirdly, RCC should strengthen its supervision. From the international experience, each country has its own supervision system. Among these, social audit is a supervision system that can` t be replaced. In China, the supervision management of RCC must pay attention to this kind of supervision. Fourthly, our government should enlarge the policy support of RCC. RCC is a union of the weak community. So the government has the responsibility and the obligation to support it. Lastly, RCC should reinforce the jurally correlative construction about...