BEIJING -- Without a microcredit of 20,000 yuan, Shan Xinhui, a laid-off
woman, would not have been able to start her own business and today boast fixed
assets worth more than two million yuan.
At the 2006 China Banking Association-Citigroup Micro-entrepreneurship Awards
Ceremony, Shan, from the western city of Yan'an in Shannxi Province, showed her
appreciation for the government and the microcredit fund that gave her the seed
money.
But, in obtaining a microcredit, Shan was one of the lucky few.
Statistics shows that only 27.3 of China's rural households have benefited
from microcredits provided by rural credit cooperatives. The total value of
microcredit loans distributed by over 100 microcredit institutions is merely one
billion yuan.
Noted Chinese economist Mao Yushi said at the ceremony: "Although China's
government has achieved a great deal in poverty reduction, there has been no
obvious progress in the operation of microcredits."
"A lack of funding and the unclear legal status of microcredit institutions
have caused a terrible bottleneck in Chinese microcredit," said Du Xiaoshan, an
expert from the Chinese Academy of Social Sciences.
"Poor business capacity, unproven operational models and a shortage of
competent professionals are adding to the problems," he said.
Du Xiaoshan told Xinhua that China's finance industry has to get rid of some
mistaken notions.
"In other countries, microcredit institutions keep providing new loans to
people with good track records, but in China people can only get loans once," he
said.
"The poorest people have the best credit, because they know the value of
borrowed money," said Du.
Dr. Muhammad Yunus, winner of the 2006 Nobel Peace Prize, also criticized
China's microcredit system.
In a meeting with Wu Xiaoling, governor of the People's Bank of China, the
central bank, he questioned China's practice of allowing microcredit
institutions to issue loans but not allowing them to take in saving deposits.
Wu admitted that serious financial risks in rural areas had led the regulator
to stop issuing banking licenses in recent years.
Mao Yushi suggested that banks such as the Agricultural Development Bank
could provide low-interest-rate loans to rural credit cooperatives, who would
then give microcredit loans to the poor.
"We must find a way to put the operation of microcredit institutions on a
sure footing. Otherwise no competent professionals or investors will join the
cause," said Bai Chengyu, chairman of the China Association for Microfinance.
A total of 113 people received this year's Micro-entrepreneurship Award at
Thursday's ceremony.
