System Changes Of Rural Credit Cooperatives At The Provincial Level Of Government Function

The reform of Chinese rural credit cooperatives (RCCs) has been mainly relatedto its management system since RCCs came into being. Under the lead of centralgovernment of China, the management system of RCCs has changed about ten timesand its management institution has been shifted among different bodies, whichexplicitly shows the typically exogenous and compelling characteristics. During theinstitutional vicissitude, both the property of the RCCs and the management functionof government are dissimilated, which deviates from the direction of cooperativefinance, seriously influences RCCs' development and its ability to serve for thefarmer-related three problems.In the newly reform of RCCs since the year 2003, the State Council of Chinahas endowed provincial government with the management function of RCCs andembodied its particular duties. Meanwhile, it emphasized the service duty of RCCs forthe farmer-related three problems. By analyzing an example in this article, we findthat the implementation of provincial government's management function to RCCs isimperfect, the deficiency of RCCs has not been amended and its capability to servefor the farmer-related three problems has not been enhanced during the institutionalvariance. At the same time, by analyzing two game models that one is between grassroots governments and RCCs and the other is between provincial governments andgrass roots governments, we also find that newly management institution can noteliminate the improperly interference of grass roots governments in RCCs. However,we discover that the provincial government can control the grass roots governmentaction through improving its duties and thus it can change the outcome of the games.Utilizing the development models of rural cooperative finance system in othercountries for reference, the paper thinks that it is only the multistage systemarrangement for provincial government's managing RCCs. After the RCCs' propertyright pattern being clear, corporate governance structure being consummate, internalcontrol being resolved, asset quality being optimized and operation object beingdefinite, provincial government's management function must be converted fromexploitation-oriented to promotion-oriented and will be mainly embodied byimplementing supervision by law, maintaining market environment and supplyingpublic product and so on.