BEIJING, March 10 (Reuters) – China’s banking and insurance regulators have issued a notice to commercial banks to boost financial support for the country’s rural areas.
In a notice issued on March 8, the China Banking and Insurance Regulatory Commission told commercial banks to fulfill special lending targets, including those for achieving faster increases in loans to farmers and other businesses in rural areas. The notice did not refer to specific targets.
The notice said banks need to direct more funds to poverty-stricken regions and ensure more rapid lending growth.
Outstanding loans to rural areas totaled 33 trillion yuan at the end of 2018, up 5.6 percent from a year ago, it said.
The new requirements come as part of Beijing’s broader effort to reboot China’s rural economy as local populations rapidly age and productivity slumps.
As the Chinese economy began slowing last year, China’s economic policymakers stepped up monetary policy support for rural areas – comprising mostly small farm holdings and low-end industries – to encourage local firms to raise funds in the capital markets.
The People’s Bank of China (PBOC), the country’s central bank, has cut the amount of cash that commercial banks need to set aside as reserves five times in the past year to spur lending to small businesses in the private sector.
China has also been looking to develop new industries like eco-tourism as well as encouraging the planting of cash crops in poor rural regions.
Critics say the campaign is narrowly-focused and does not address the root problems facing China’s poor, as efforts in improving health care and education – crucial to their long-term well-being – are lacking. (Reporting By Norihiko Shirouzu and Yilei Sun in Beijing; Editing by Michael Perry)