Wednesday, October 25, 2006

Microcredit in China virtually nonexistent

When a little money goes a long way - Pallavi Aiyar

In China, where the rural population stands at a weighty 700 million, only some 100,000 people have borrowed from microcredit institutions.

China's breakneck economic growth has led to a sharp income gap between rural and urban areas transforming one of the world's most equal, albeit poor societies, into one with a gini-coefficient (a commonly used statistical measure of income inequality) worse even than that of India.
Comrade Pallavi Aiyar is evidently upset that China is lagging behind India in this key indicator.

China's rural population is 700 million and the migrant floating population is estimated at 200 million.

On Chinese Banking:
Chinese banking continues to be dominated by large, inefficiently managed state-owned banks, beset with non-performing loans.

In China it remains extremely difficult for private enterprises to get access to credit. Bank loans still go overwhelmingly to state corporations and nearly three-fourths of the private sector has to depend on "shadow banks" for credit.

40 per cent of state-owned companies are losing money.

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