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The United Nations is the first international organization to introduce microfinance in China. Since the 1980’s, UNIFEM, IFAD, UNFPA have included financing contents in their poverty alleviation or agriculture developing projects in China. Later, international NGOs like Worldvision, Hong Kong Oxfam also included financing contents in their poverty alleviation and community development projects towards poor people.

In 1993, the Institute of Rural Development of CASS introduced the Bangladesh Grameen Bank, an international standardized microfinance model, into China and created “Funding Poor Cooperatives (FPC)”. Microfinance projects were then launched in 6 counties with various donations and low interest loans as the lending fund. “Microfinance” became a terminology and a special poverty alleviation method to be experimented and distributed throughout China.

Since 1995, UNDP/CICETE microfinance poverty alleviation projects have been carried out in 48 counties and cities in China’s 17 provinces. Later, urban microfinance for laid-off workers was carried out in Tian Jin Municipality and some cities in He Nan province. The project followed the Grameen Bank style, but the organizational structure was determined by Rural Development Associations specially founded by local governments.

In 1995, the Australian funded China Qinghai Community Development project also started microfinance. The project was mainly carried out by the Agriculture Bank of Hai Dong region with an operational capital of 14 million RMB. In June of the same year, the World Bank CGAP was founded and drove the global microfinance industry into a new era. Microfinance hence became internationalized and standardized.

In the 1990’s, other organizations like UNICEF、UNFPA、UNWFP，CIDA, Government of Germany, Government of Holland、Ford Foundation、Worldvision、Oxfam、Word Bank Poverty Alleviation Project also implemented microfinance projects within China.

In 1997, the government of China summed up the experiences learned in the microfinance pilot projects and in 1998 began to promote government-oriented microfinance projects on a larger scale. Before 1999, microfinance was mainly a poverty alleviation discount loan subsidized by the central treasury and distributed via the FPC who is an agent of the Agriculture Development Bank (and later transferred to the Agriculture Bank). From 1999 this was changed and the loan was distributed to the farmers directly from the Agriculture Bank. However, the microfinance business later shrank on a great scale. From mass promotion to mass business contraction, microfinance experienced a period of violent ups and downs.

At the end of 1999, Rural Credit Cooperatives (RCC) also began to promote microfinance. Their main source of funds was the PBC’s relending fund, which had a preferential interest rate so as to support agricultural development.

Chinese microfinance has experienced 10 years of development, but as yet it is still in an experimental and exploratory stage, or perhaps in the primary stage of its development. Its main purpose is to provide low-income people with production-related credit services.

 

At this present time, financial and non-financial institutions engaged in microfinance in China include: CASS Rural Development Institute, CICETE, Women Developing Department of the National Women Federation, China Poverty Alleviation Foundation, Amity Foundation, Handicapped Federation, Ministry of Science and Technology, the Agriculture Bank, Rural Credit Cooperatives. Besides, there are international organizations like UNDP, UNICEF, UNFPA, International Agriculture Development Foundation, World Food Plan, World Bank, Asian Bank, Ford Foundation, Hong Kong Oxfam, Worldvision and other bilateral aid projects with Canada, Australia, Japan and Germany.

In order to further drive the development of microfinance in China, CICETE, Rural Development Institute OF CASS and the Women Developing Department of the ACWF jointly proposed to create “China Association of Microfinance” in 2004 and this proposal received a positive response and support from many authorities and units.

In order to facilitate the objective of prolonged development, the United Nations has named 2005 as the International Year of Microcredit.

Preparatory Team, CAM