The Exploration Of The Improvement In The Relevant Issues And Strategies In Chinese Rural Financial Market

China is the largest developing country of the world. There are 1.3 billion people, and 800 million live in rural areas. As a large agricultural country, agricultural issue has been the fundamental problem in China, which will constrain national economic development and modernization. Agriculture is the basis of economy. The government has proposed to speed up rural financial system and improve rural financial services since 2004 through 5 No.l policy documents. Increasing peasants'incoming is the core of solving rural problems, and the fund is the key point of increasing peasants'incoming. That's why building a sound rural financial markets is so important. Therefore, the paper searched the relevant problems and solutions of strengthening competitive rural financial markets in China from the perspective of Contestability Theory.This paper is mainly consisted of two parts:the first part is the Introduction (ChapterⅠ), which is the literature review, describing the purpose and significance of topics, domestic and foreign research, research ideas, arrangements, innovation, research methods and the scope; The second part is the main thesis (ChapterⅡ-Ⅳ). The second part focuses on the following elements。Chapter II focuses on the Contestability Theory, which is the theoretical basis of establishing and strengthening the rural financial market competition. It details the theory and innovations of Contestability Theory. And it analyses the difference between the Comprehensive Competition Theory and Contestability Theory, explaining why the rural financial market is suited to the Contestability Theory. Competition in the market is a process of discovering information and reducing information asymmetric and incomplete, which is the reason why relying on market to solve the problem of information asymmetry. However, there are regional information which is only existed in rural financial markets, that makes the regional competition independently and strongly. Therefore, we can establish a contestable rural market in China. In this way, the efficiency of financial system will be greatly improved and allocated.Chapter III is the analysis of inadequacies between supply and demand of the competitive rural financial system, from which analyses the reason why competition is inadequate.Chapter IV focused on the method in line with China's circumstances by the way of analyzing the developing countries and developed countries.Chapter. V is the emphasis of this paper, which analyses the inadequacy of rural financial market in China. It divided into three parts:first, it is the representation of inadequacy in the rural financial market; then, it is the analysis of formal rural financial competition; last, it is the analysis of the potentially competitive institutions.Chapter VI proposes the proposal to establish and strengthen a competitive rural financial market. The proposals are as follows:first, the state-owned commercial banks should increase the endorsement to agriculture. Second, re-orientating the agricultural development banks. What's more, take the "lenders Ordinance" into account. Last but not least, improving the enthusiasm of new-type rural financial institutions to enliven of the rural financial markets.The paper researches the problems and solutions of strengthening competitive rural financial markets in China, which from the analysis of fund demand and productivity. The innovative is the use of contestability theory, which is in line with the actual situation in China's rural financial market theory to solve China's rural financial markets, the problem of insufficient competition.