Research On The Necessity And Feasibility Of Capital Entering Into Rural Areas

Equilibrium is a necessary prerequisite for long-term development of anything. The China government has raised the new concept of "building a socialistic harmonious society" on the 16th National Party Congress, which is from the view of equilibrium. Today, our society has achieved a tremendous and unprecedented progress, but it is undeniable that we are still faced with many issues requiring urgent solved, "three agricultural issues" is to become the priority of these issues. In order to solve the "three agricultural issues" and make the rural economic and society to develop coordinately and rapidly, the China government has made a number of policies which are aimed at "increasing the income of the farmers and reduce the burden on peasants". However, rural economic growth rate still lags behind the city after several years of practice and development, the urban-rural gap is constantly increasing. So what's the reason? After in-depth investigation and scientific research and analysis, the authors found that the fundamental reason rest with the relative lack of capital factors in the rural area. Therefore, in order to solve the "three agricultural issues" fundamentally, we can only from the perspective of the allocation of resources. Under the background of existing market economics, the capital should be introduced in rural areas, so that capital, land, labor and other production factors in rural areas can achieve effective and reasonable allocation, the rural economy will achieve the aim of developing harmoniously and rapidly.Combined with the theory of economics, finance and sociology, the authors found that the allocation of capital, land and labor is extremely uneven in China's rural areas through the in-depth investigations and studies on the microscopic sample of Zhou Village of Putong Town, Qingzhou City in Shandong Province. This mainly expresses in three aspects: (1) the land contract responsibility system make the land separated so much that the land can not play the production potential; (2) the lack of access to external capital, the accumulation of capital in rural areas is very slow; (3) The relative labor surplus highlighted the problem of surplus labor. And through the empirical analysis of the agricultural policies for supporting agriculture made by the central authorities, the authors found that these policies only have limited impact on the increase of farmers' income, the objective of capital-entrance to the rural areas will not be achieved. Therefore, in order to improve the income of the farmers and make the rural economy and society to achieve coordinated development, it is necessary to make the capital enter into the rural areas, to develop modern agriculture, animal husbandry, industrial and some other rural industries.Given the capital's "profit-pursuit nature" and the current market economics background, this paper focuses on the issues of how to achieve the integration of capital and rural, that is to say, the feasibility of integrating capital and the rural areas. Based on the current capital market development in rural areas, the paper studied the rural capital market from the three aspects of the farmers, rural financial banks and government. At last, this paper took "the five-household joint guaranty" policy as an example, studied the feasibility of combining capital and rural areas from the perspective of the financial system innovation, and made a number of specific policy proposals. These policies mainly are: (1) to develop rural financial guaranty companies, help farmers make loans and expand rural finance scale of investment; (2) seek to take the land, housing and other assets in the rural areas into capital, improve the financing capacity of farmers; (3) central government set special fiscal funds to provide support for agricultural loan guarantees; (4) to deepen reform of rural credit cooperatives and further play its role as the main force in rural finance market; (5) explore suitable system innovation and Product innovation from the actual situation of "three agricultural issues", and cultivate a competitive rural financial market.