858 new rural financial institutions established in China

858 new rural financial institutions established in China

I have always said to be able to grow your firm you need to be where the growth is and if you happen to be involved in business in China that place is going to be in the second and third tier cities in the interior of China.

 

The China Banking Regulatory Commission (CBRC) said it has been taking proactive measures to promote the establishment of rural banks. Their goal is that 75 percent of the new rural financial institutions would be set up in central and western regions of China.

 

Proof of the rapid development in rural financial services is since the beginning of the year China has established 858 new rural financial institutions, including rural banks, credit companies and capital cooperatives, according to China’s banking regulator. Of the financial institutions there are 799 new rural banks, with 60 percent (481) of them located in central and west China according to the CBRC.

By the end of this past June, the total assets of all operating rural banks stood at 319 billion RMB, with the capital adequacy ratio at 28.6 percent and outstanding loans totaling 178.2 billion RMB. Private investment has been a major capital source for rural banks, according to the CBRC of the 47.7 billion RMB (7.57 billion U.S. dollars) total share capital of all rural banks; 74 percent was held by private investors.

David Nealis in Shandong, China.

In May, the CBRC introduced several guidelines to encourage the participation of private capital in the banking sector, including lowering the minimum shareholdings of the main initiator for rural banks from 20 percent to 15 percent. The CBRC also allows the main initiator to adjust shareholding ratios with other holders once banks enter into a “sustainable development track”.

The old American saying of “Go West Young Man” applies here, though Shanghai and Beijing will remain the centers of commerce and power, the new business development is in the interior.

China, the world’s 2nd largest economy, continues to be the most important market for companies looking for growth and Chinese companies continue to globalize by investing and selling their products in new markets; what is your company’s strategy for engaging China?

 

Futures and Options Risk Disclosure
Trading futures and options involves the risk of loss. You should consider carefully whether futures or options are appropriate to your financial situation. You must review the customer account agreement and risk disclosure prior to establishing an account. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of futures results. The risk of loss in trading futures or options can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.