Domestic and overseas lenders wishing to open city-based branches in the first six areas must also establish outlets in counties and towns, said Zang Jingfan, the CBRC's head of co-operative financing.

The average per capita income in rural China stood at 2,760 yuan (US$349) in the first nine months of this year, less than one-third of the 8,800 yuan (US$1,114) earned by urban dwellers, according to the National Bureau of Statistics.

The Chinese Government is determined to boost the income of the nation's 745 million rural residents, using loans and increased spending on public works to help drive up rural incomes.

"China needs 15 trillion yuan (US$1.9 trillion) in new funds for rural areas by 2020," said Zang.

"The government wants to fill the gap in terms of financial services in rural townships because many banks have withdrawn to compete in cities."

Rural dwellers had less access to financial services than their urban counterparts, with average per capita borrowing standing at 5,000 yuan (US$640) at the end of 2005, less than 10 per cent of the amount in cities.

China has 12 rural commercial banks, 76 rural co-operative banks and more than 20,000 rural credit co-operatives, according to data from the CBRC.

"The existing financial institutions can hardly meet farmers' needs due to their limited sources of funding," said Zhao Xijun, a professor at Beijing's Renmin University of China.

(China Daily 12/23/2006 page5)

1

2

(For more biz stories, please visit Industry Updates)