JIN DING/CHINA DAILY
Development of rural finance is important to accelerate rural vitalization
Issues related to agriculture, rural areas and farmers are fundamentally important in China. Through strenuous efforts in recent years, the country has eliminated abject poverty in rural areas, contributing greatly to building a moderately prosperous society in all respects.
In the new stage of development, the comprehensive implementation of the rural vitalization strategy is no less deep, extensive and difficult than the fight against poverty. We should be keenly aware that the foundation of agriculture is not yet solid, the rural-urban gap remains large, and rural areas are underdeveloped. While consolidating the results of poverty alleviation, the country needs to promote sustainable development in rural areas by shifting the focus from poverty relief to improving rural areas' capacity of independent growth, and addressing unbalanced and inadequate development, all of which require stronger financial support.
To realize rural vitalization, the country must give top priority to the supply of key agricultural products, particularly grains, and attach more importance to improving the agricultural production capacity. Boosting the integrated development of rural finance and rural industry to advance rural and agricultural modernization is important for realizing industrial prosperity in rural areas. The modernization of agriculture entails intensive and large-scale production, and greater investments in farming technology.
Given that China has a vast rural population, the majority of them is middle- and small-scale farmers, and per capita arable land is less than half the world's average, it is not feasible to promote large-scale and mechanized farming in most regions. Still, financial inputs are necessary to cultivate large-scale grain producers, family farms and farmer cooperatives.
The rural-urban divide remains wide and rural financial services need improvement. Increased credit support over the long term is necessary to boost the construction of rural infrastructure and provide rural residents with better public services. Improving the ecological environment and living conditions in rural areas also needs the support of green finance.
In addition, financial resources should also be channeled to fields such as rural tourism and agriculture-related leisure as well as rural e-commerce to turn distinctive local resources into higher incomes for residents. For example, Liuzhou, a city in South China's Guangxi Zhuang autonomous region, has successfully turned luosifen or snail rice noodles, a local signature street food, into a specialty industry. Not only has the snack found its way to the dining tables of families across the country, but it has also driven the development of industries producing ingredients such as snails, bamboo shoots, string beans and black fungus, increasing the added value of these agricultural products.
In order to help farmers increase their incomes, it is important to continue improving basic financial services and boost the accessibility and inclusiveness of financial services in rural areas. The country should consolidate the achievements of poverty alleviation, provide sound financial services to migrant workers and new citizens, and prevent farmers from sliding back into poverty by raising their awareness of financial risks, and helping them cultivate healthy consumption habits and keep good credit records. The financial demand of rural residents needs to be further unleashed.
Because of their unstable incomes and weak ability to withstand risks, rural people have a tendency to save money for long periods, leading to large amounts of deposits in rural credit cooperatives. As farmers' incomes keep rising, the potential of the rural consumption market should be further tapped. The financial literacy of farmers should be improved. Financial institutions should make innovations to meet the demand of rural residents in maintaining and increasing the value of their assets and the demand for old-age care.
Agriculture, rural areas and farmers are the weak links in China's socioeconomic development, and rural financial services are the weak links in the country's financial system. This year's No 1 Central Document underscored the role of financial services in rural vitalization. The People's Bank of China and the China Banking and Insurance Regulatory Commission have recently rolled out policies and measures to promote rural vitalization by channeling more financial resources to key areas and weak links in rural vitalization efforts.
Primarily, the building of a modern rural financial system that suits the rural vitalization strategy should be promoted. In recent years, large banks have actively expanded their operations in county-level regions, and vigorously developed inclusive finance, achieving preliminary results.
The boundaries of services provided by policy banks should be further specified and clarified to better support rural vitalization, and give more importance to rural infrastructure construction. With the evolving social environment, some banks have deviated from their original functions and blindly expanded the scope of their business. As a result, they lost their advantages and faced higher risks. That hinders them from serving rural vitalization. In addition, a multi-channel financial system that includes stocks, bonds, futures and insurance should be built to inject diversified funding to bring about rural vitalization.
The country should expand pilot programs of rural assets-backed mortgage financing, promote the models of cooperation between banks and government, mortgage business and insurance companies, and make the durations of credit products more suitable to cycles of agricultural production, thus easing the financing difficulties in rural areas. Also, it is imperative to follow the trend of accelerated digital penetration in rural areas and agriculture, and promote the integration of financial technologies and digital technologies.
Last, agriculture is susceptible to natural disasters and other uncertainties, thus agriculture-related loans involve higher risks. To increase the financial support for rural vitalization, not only should financial institutions improve their services, but also all parties involved should enhance their coordination and collaboration to build a long-term guarantee mechanism for rural vitalization. Efforts should be made to strengthen the construction of financial infrastructure and top-level designs of the rural financial system and put to work rural resources, particularly land resources. It is also imperative to further the construction of a rural credit system and unleash the financial demand of farmers and incentivize the enthusiasm of financial institutions to serve rural development.
The author is the chairman of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference and the chairman of the China Wealth Management 50 Forum. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.
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