Financial Reforms Push Capital to the Countryside

In the past, rural finance was neglected. Now China has utilized its abundant capital to recapitalize rural credit cooperatives, increase financing for agricultural commodity procurement, and promote microlending on an unprecedented scale. It has begun experiments in creating new village banks, loan guarantee companies, and formalizing informal lenders. Restructuring of institutions appears to have addressed some of the most egregious problems that existed in earlier decades, but the basic structure of the rural financial system is unchanged. The overarching theme of reforms appears to be to push more capital into rural areas.