Microcredit Service Providers in China

Having recognized microcredit as a viable means for enlivening local economies, the Chinese government has recently made significant efforts to expand the number of vehicles for microfinance throughout the country. There are now two legal statuses for microcredit organizations: village banks and microcredit companies, which both started out as pilots but which are now spreading throughout the country as institutions and companies test out these new forms of microcredit organizations. With such local initiatives underway, PlaNet Finance China is monitoring the situation to see how many of these efforts actually end up helping very small companies and the micro-entrepreneurs rather than catering to the small and medium enterprise markets.

Some potentially key players in the development of China microfinance include the Postal Savings Bank of China, which has a network of 36,000 original China Post branches, certain levels of which have been permitted to distribute loans in addition to collecting savings. The rural credit cooperatives also remain a huge network in the China microfinance market, which distribute microloans to 73 million clients, though they are continuing to transform themselves into new management structures whose outcome is not yet certain. What is certain is that most of them appear set to turn into some form of banking institution. An example of this is the establishment of the Yellow River Bank in Ningxia Autonomous Region.