Study Of Chinese Rural Financial Development

The paper analyses the rura1 finance development of China by using the financedevelopment theory. The paper reviews the history of rura1 finance deve1opment ofChina, inc1uding the rura1 institutional and out--institutional financia1organizations. The paper empirica11y ana1yses the deve1oPInent degree of China ruralfinance in l978--2000. The paper main1y studies the outflows of capita1 from rura1sectors through financia1 channe1, the rura1 financial risks, the financia1 demandsof farmers, the financial demands of the Township and Vi1lage Enterprises (TVEs),the rura1 policy financia1 demands as China has entered the WT0. The paper triesto raise the institution fraJne of the rura1 finance of China.The development of economy 1imits and determines the deve1opment of finance,whi 1e the 1atter has an accelerating effect on the former. The sound financial systemcan effective1y absorb the rural savings and can put the capita1 into the productionsectors. The good cyc1e is so important to the deve1opment of economy and finance.But the financia1 inhibitions 1ead to the lack of development of economy and financein the developing countries. The main task of the rural finance is to so1ve thevicious cycle prob1em between rural economy and rura1 finance. In the world, bothdeveloped countries and deve1oping countries, a11 attach importance to rura1finance. China can 1earn from the foreign rural financia1 institutions.The China's rural finance goes through four stages since 1949. The rura1 financewas inhibited serious1y before 1978. Since the reform and opening--up, the reform ofrura1 finance is deepening, and the sca1e of the rural finance is enlarging. Therura1 finance has given enormous contribution to the rura1 economy and nationaleconomy of China. Now, China is setting up a rura1 finance system inc1uding thecooperative and pol icy and conunercial finance. The rural finance sti 11 does not meetthe needs of the rura1 economy.The paper indicates that the ba1ance of the rura1 deposits, savings deposits,loans, agricu1tura1 loans, TVEs 1oans increase very quick1y and considerab1y since1978. Savings deposits are the main source of the rura1 deposits. The rura1 financia1. interre1ation ratio (RF1R) and the rura1 financial deepen degree (rural M2/rura1GDP) increase very quick1y. There are the 1arge gap among eastern, midd1e and westernregion in the rura1 finance. The proport ion of the rura1 deposi ts, savings deposi ts,loans, agricu1tura1 1oans, TVEs loans of eastern are very 1arge, and the proport ionof midd1e and western region are very sma1I.0ne of the most serious problems is the outf1ows of the capita1 from rura1 area.The capita1 of rura1 area is scarce increasing1y. The deve1opment of agricuItura1economy and rural economy and the ruraI finance itsel f are a11 influenced becauseo\f' thc ()uttlows of rural cap ital. The paDer stud ies the net outflows of capi ta1 tromfarmers,rural area and the county area through financial channel．The farmerssavings deposit Is the most important source supporting the agricultural and ruralecono。y．In recently 22 years。the Rural Credit Cooperatives(RCCs)and rural postsavings deposit organizations become the main chamels of the outflows of ruralcapital．The outflows of capital from the county area are very large and the outflowsdo harm to the county s and rural economy． Another problem Is the serious rural financial risks．There are many kinds ofllnanclal risks In rural area．The reasons of the rural financial risks are verycomplicated．nd the rural financial risks do harm to the rural financialorganizations and the rural economy．There Is close relationship between ruralfinancial risks and rural social stability．There Is great potential of risks InRCCs and rural nongovermental financial Institutions． The deposit demands of farmers are satisfied basically．But the loans demandsof farmers are not satisfied．The dlfflcultles of farmers...