Microfinance Gets Rolling in China

Recently there have been signs that microfinance in China is finally ready to make an impact.

Due to their giant populations and rapidly expanding economies, China and Indian are often compared and contrasted: totalitarianism v. democracy, a manufacturing led economy v. a service led one- and while microfinance has grown rapidly in India, it has been rather stillborn across the border. Much of this is due to previous official resistance to micro-entrepreneurs that I suspect is largely rooted in official ideology.

While the Chinese government is showing no signs of openness in many areas, the economy is clearly an exception- and this embrace of liberal economics may now be spreading to microfinance as well.

Last fall the Chinese banking regulator, the CBRC, lifted many of the obstacles for foreign banks to begin operations, additionally it has been actively supporting foreign banks who target the rural demographic, by structuring pilot programs. It seems Citi, HSBC and Standard Chartered have taken the charge and are now dipping their toes in. China’s rural farmers are hugely attractive to them, a absolutly massive market- if they can gain access to them through microfinance, a formalized mechanism for hooking the rural poor to financial systems, so much the better.

Additionally, it seems Vikram Akula’s SKS- the darling of Indian microfinance, is unfurling plans to enter the land of the panda as well. With a pile full of cash and one of the most professional management teams in microfinance they will surely make a dent.

Also, I ran across this: a children’s book about microfinance- pretty neat.