The Problems Of Agricultural Policy Bank In China And Countermeasures

The Chinese government has always given high priority to agriculture, rural areas and farmers. After more than 20 years of reform and opening-up, the comprehensive capacity of agricultural production has been greatly improved; the farmers' income has been raised. However, with the development of rural areas and rural economy, many problems in rural financial system began to emerge. The overall function of Agricultural Development Bank of China was weakened and no longer compatible with agriculture and rural economy. In 2004, the Document No.1 of CPC says that the policy banks, such as ADBC, should adjust their function and business field, provide more services to agriculture, and rural areas. It is urgent to solve the problem of how to meet the demands of the present conditions, further reform of agricultural policy bank, and give more financial support to the rural development.The special position, which agriculture takes in the national economy and China's rural and agriculture policy-oriented bank's development spells out that ADBC should be established. There is an existence of agricultural policy bank in foreign countries for over a hundred years, but this is still something new in China. With agricultural policy finance at its initial stage and development stage, some weak points and problems have revealed in the existing agricultural policy finance, e.g. source of agricultural policy credit, the relationship between policy bank and relevant departments, external environment, operational mechanism, credit risks. By the enlightenment of foreign agricultural policy bank and the study of ADBC, in order to address these problems, we must enhance the role of agricultural policy banks and accelerate the development of rural economy. Set up a special fiscal budget and legislation for policy-oriented finance. With the establishment of the financial subsidies for policy financing, the policy financial institutions have to seek sustainable development at the same time. Strictly supervise and check the policy bank. Now, ADBC is planning to offer new services in accordance with the reform in the grain and cotton circulation system. They should also have clear objectives, good governance, high-quality assets, standardized management, improved internal control,leading management methods and strong ability in implementing policies. All these will ensure the sustainable development of agriculture and rural economy.By using the methods of positive and comparative analysis, the paper researches the history and present situation of policy bank and the operation of foreign and domestic agricultural policy bank.