Thoughts On Rural Financial System In China

It is the most significant and difficult things for the present government to tackle the issues concerning agriculture, countryside and farmers, to which the key is the problem of farmers'income. As money is basic for production, if we don't solve the problems of rural credit, we can't improve the farmers'income. Nevertheless, the rural financial system in the country is facing serious problems.The article is studying the problems existing in the rural financial system of China from the angel of rural financial credit. Whether the rural financial system is good or not depends on the behavior subjects. The fundamental behavior subjects in the countryside are farmers. Therefore, we can investigate the key object of the rural financial system from the angel of asking for a loan by peasants, based on which we are separating the issues in the rural financial system into five parts: (1) Money can's meet the demands for its insufficiency. (2) The dislocation between the official and unofficial financing. Unofficial financing is the dominant part in rural financing, and hammering the unofficial financing will pose many latent problems. (3) The higher percentage of non-productive financing in rural areas will influence the sustainable development of rural credited money. (4) Farmer's poorer mind on financing. (5) Micro-credit constitutes the key part of farmers'crediting of which the operating mechanism needs improved.The rural financing is the subsidiary category of rural economy, and the rural economy will restrict the effect of rural financial system. Therefore, besides of the investigation of rural financing, we should also investigate its ambient economy. Except for the unsuccessful reform of rural financing system itself, rural financing system is facing the non-financial problems which couldn't be got over by itself. The non-financial problems are as follows:A.Farmers have accumulated a small sum of fortune. B.Since the liberation of the PRC was founded, the farmers'income has increased slowly.C.Rising expenditure by farmers by a big margin in recent years.D.Agriculture is a weak sector with lower level of profit making and longer production cycle as well as the lower ability to resist the natural disaster. E.Because the rural areas are vast and sparsely populated, the trading cost for economic activities is very higher.Because of the above-mentioned non-financial factors, we must implement the comprehensive rural reforms consisting of rural tax and fee reform, compulsory education reform, medical system reform and urbanization, so as to improve farmers'income and reduce their expenditure as well as improve the production efficiency and lower the trading cost for rural economic activity. A successful comprehensive rural reform is the precondition for the rural financial reform.the article has summarized the basic reason for financial problems existing in the rural financial system. The author considers that financial restraint is the fundamental reason for the problem in domestic rural financial system, which is expressed in the form of restrain on financial supply. And the restrain on financial supply mainly comes from the restriction of formal finance and the hammering of informal finance. Furthermore, such points of view as obvious externality of rural finance and the right for a citizen to enjoy the basic financial service. The utmost importance of rural financial reform should be place on expanding the supply of money and strengthening finance.Finally, the author put forwards some advices on the relevant policies. First of all, the rural financial supply should be encouraged and the nongovernmental finance should be made legalized while the Rural Credit Cooperative should be further reformed. Secondly, the further support should be given to rural finance and the support policies and long-acting Mechanism need stipulated. Thirdly, the relevant measures should be taken to increase the farmers'income and improve the economic condition of farmers. Fourth, quickening the steps in the urbanization of countryside is the path to completely solve the problems of rural finance.