The Path Selection Of Rural Financial Reform In China

It is one of the most challenges of China's financial reform that let the"grassroots"get the financial blood like the people in the cities and let the hundreds of millions of peasants get the financial supports and financial services. We began the third rural financial reform in 2003.Untill now the result is not good. The agriculture is the base of the national economy, the peasants are the main forces who are building the"Economy House", and the rural is getting poorer as the cities is getting richer . The development of agriculture, peasants and rural relates to the progress of the entire country's economy and the building of a harmonious society as a whole .Therefore, the rural financial reform is a big problem for our country and its people's livelihood.In the introduction of this paper, I briefly explain the significance of choosing this topic and the research background, and summary the results of research before. In the part of body, starting with the history and current situation of our rural financial reform, I introduce the three rural financial reforms and analyze the problems in the process of the rural financial reform, as well as the reasons for the financial lack. And then I introduce the theories on rural financial reform and analyze the characteristics of the rural finance abroad and the lessons from them. Finally, I suggest the path selection of rural financial reform in China from a macro perspective, and analyze the situations of all the components of the path, as well as trying to put forward the direction of reform from a micro perspective. Specifically, the whole paper can be divided into five parts:The introduction can be divided into two parts. Firstly, I explain the significance of the topic and the research background. I choose the rural financial problem as my paper's object of study, because the rural financial reform is under way and the rural financial problem is gradually concerned by people in recent years. Secondly, I briefly introduce a number of domestic research results, which includes five points: the general idea of reform, the reform of rural credit cooperatives, the improvement of policy-oriented financial system, the healthy development of non-formal finance and improvement of agricultural insurance system.The first chapter includes three problems, in which I analyze the history and current situation of rural finance. Firstly, I briefly review the three rural financial reforms before. The third reform is still in progress. Secondly, I explain the five problems of our rural finance with a lot of data and the length. The first is that the level of development in the rural finance of all regions is imbalance. The second is that the public financial expanses for agriculture are too short, which even show a downward trend. The third is that the rural credit cooperative has become the main force of offering the financial services to the rural, and the other financial institutions gradually shrank in rural financial market before late 2006. The fourth is that the civil lending is very active and its scale is very large, which will generate many problems. The fifth is that the agricultural insurance system is not perfect enough, whose ability of spreading the risks is very poor. Finally, I analyze the reasons of lack of rural finance, which includes: the serious asymmetric information, lacking the collaterals recognized by formal financial institutions, having the special risks and costs, borrowing for unproductive purposes often and the single small amount of borrowing.The second chapter includes four aspects, in which I discuss the theories of rural financial development. The first is the agricultural development theories of Marxist political economy, which includes: the characteristics of the agricultural industry and the capital of alternative theory, the coordinated development of the national economy equilibrium theory and the capital accumulation and organic composition of capital theory. The second is the agricultural development theories of development economics, which includes: dual economy theory and capital formation theory. The third is the financial development theories of western economics, which includes: financial development and the deepening of finance theory, financial structure theory and agricultural finance development model theory. The fourth is microcredit theory, which is quite popular in recent years and is the highlight in this chapter. I introduce the microcredit theory in three aspects of meaning, new modes and interest rates, but microcredit theory is some more summaries of practices and experiences, which will be introduced in the last chapter on the sustainable development of commercial banks.In the third chapter, I introduce the characteristics of the rural finance of four foreign countries and its experiences, which are the United States, France, Japan and India. Because the four counties have different geographical environments and the national histories and cultures, they have different modes of the rural financial development too. However, we could also get some experiences of the rural financial reform from them, which include: establishing the financial institutions system combined by cooperative, policy and commercial institutions, improving the agricultural insurance system, increasing the supports of government, and attaching importance to the effects of legislative.The fourth chapter is the core, in which I explain the path selection of Chinese rural financial reform suggested by me. Firstly, I describe the path from a macro perspective, which is carrying out the reform from two aspects of financial system and facilities. For the former case, we should establish a financial system, which is dominated by rural credit cooperatives and is joined by commercial financial institutions and policy-oriented financial institutions. For the latter case, that are promoting civil financial development reasonably and healthily, perfecting the agricultural insurance system and improving the legislation. And then, I discussed the main problems of above-mentioned micro-objects'reforms and corresponding solutions in the next six sections. Rural credit cooperatives need to clarify property rights and improve the corporate governance structure. In order to ensure the business continuity in the rural financial market, the commercial financial institutions need to introduce some microcredit practical experiences. Policy-oriented financial institutions should firm "three rural service" concept and increase these financial inputs. It is necessary to distinguish the borderline between the legal and illegal civil finance, and protect the former and crack down the latter. The government-led agricultural insurance mode should be established in order to improve agricultural insurance system. Besides, we also should improve the rural legislation and strengthen the law enforcement.