NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, June 3, 2015

In its Decision on Major Issues Concerning Comprehensively Deepening Reforms of 2013, China stated that the nation must develop inclusive finance to improve financial markets. Inclusive finance attempts to reach all borrowers that seek funds, especially those who cannot readily obtain them, such as the poor, those in rural areas, small and medium enterprises, and micro-enterprises. Can China’s financial system indeed become more inclusive to envelop individuals and firms that have had to rely on non-bank financial alternatives?

To carry out this directive, the People’s Bank of China has added 20 billion RMB in refinancing loans to the rural sector and encouraged internet finance, while the China Banking Regulatory Commission has encouraged rural commercial banks to lend to agriculture, farmers, and rural areas to develop inclusive finance. Financing to small and medium enterprises (SMEs) and micro-enterprises has also been extended via policies and institutions.