China Economic Review

Committee chief calls for overhaul of China’s “underbanked” system

The head of the government-affiliated China Small and Midsize Enterprises Association has urged for greater action in widening financial channels to sectors of the economy traditionally starved of capital assistance, in particular small businesses and those tied to agriculture.

Liu Kegu told the committee that greater nuance was required to ensure those underrepresented by the current financial system are not held back further by vague policy goals sent down from Beijing, Caixin reports. The government should instead dig deeper into the structural problems facing smaller enterprises and the farming sector, with greater distinction between different income groups.

China has made ‘inclusive financing’ – referring to increased access to financial services for those lower down on the economic ladder – a key policy since 2015 when it rolled out its “underbanked” national strategy to boost growth in rural areas and the small business sector.

As the country’s debt problem began to weigh on the minds of policymakers, the government has had to find ways of ensuring credit is highly targeted to areas of the economy in greatest need and away from the swollen state-owned sector. Just last week one of China’s big four state banks laid out plans to release Rmb 3 billion ($438 million) into a state liquidity fund for small and rural businesses.