Li Gan

Current Development Status of the Rural Financial Market

The rural financial market is important for rural economic development. For important participants in financial market (rural households), the development of the rural financial market not only relates to preserving and increasing wealth, but also to whether they can obtain adequate credit funds to change the initial endowment and expand sources of income to improve earnings.

Rural Household Properties

This chapter describes the property of rural households from three aspects, including rural household assets, debts, and net assets. By analyzing the statistics, we find that the average rural household has 317,200 Yuan in assets, but only 23.7 % of households’ total assets reach the mean level. The average value of rural household debts is 21,600 Yuan and 295,000 Yuan of net assets. With the unbalanced property distribution of rural households, the richest 10 % of households possess 54 % of all rural household properties.

Financial Risks of Rural Households

This chapter analyzes rural households’ financial risks. Data shows that the proportion of indebted rural households is higher than the overall level, but they are have a smaller scale of debts. Rural households in the western region are most indebted yet have the smallest debt scale.

Rural Household Incomes

This chapter analyzes rural household incomes. Studies have shown that overall rural household income is relatively low and is only equal to 58.8 % of the national average income. This shows the huge household income gap between rural and urban households in China. In terms of regional differences, rural household incomes in China’s eastern region rank the highest with 41,786 Yuan per household followed by rural households in the central region with 35,046 Yuan per household. Rural households in the western region rank the lowest with 33,183 Yuan per household.

Basic Condition of Rural Households

Southwestern University of Finance and Economics (SWUFE) launched the China Household Finance Survey (CHFS) in 2009 and established the Survey and Research Center for China Household Finance (hereafter referred to as “the Center”) in 2011. The nationwide door-to-door survey, carried out in every other year, aims at collecting micro-level information about household finances.

Rural Households’ Formal Credit Demand and Availability

Overall, the formal credit demand of households is 18.4 % and the availability is 40.5 %. The formal credit demand of rural households is 19.6 % and the availability is 27.6 %. From the usage perspective, rural households’ formal credit demand for agricultural production is 24.4 % and the credit availability is 31.3 %; this is far below the industrial and commercial formal credit availability of 44.8 %.

Rural Households’ Private Lending

Lending behavior among rural households is an important part of the rural financial market, not only promoting households’ income levels but also eliminating rural poverty and narrowing income disparity. In the rural areas, due to serious information asymmetry in the lending market, the informal financial market is an effective complement to the formal financial market. In 2013, 40 % of rural households participate in private lending; this proportion is far higher than the overall level. Private lending funds are mainly used for housing and production and operation, however, the funds mainly come from siblings and other relatives and friends. Only a small proportion of households obtain loans from informal financial organizations.

Expenditures of Rural Households

In this chapter, rural household expenditure are divided by their purposes into three groups: agricultural production expenditures, consumption expenditures and transfer expenditures. The average numbers of these three groups are 9590 Yuan, 30,505 Yuan and 2645 Yuan, respectively. Statistics show that transfer expenditures exist in 75.0 % of rural households. Generally, 7.5 % of rural households’ total income is spent on transfer expenditures, 2.2 % higher than urban households.

Financial Knowledge of Rural Households

In order to better understand the financial knowledge of households in China as well as study how this knowledge influences households’ financial and economic behaviors, a series of questions on financial knowledge was designed in the second round of 2013 CHFS to measure Chinese households’ financial knowledge.

Rural Household Employment

CHFS (China Household Finance Survey) reports that the economically active rural population comprises 60.7 % of the overall rural population while the working population comprises 97.4 % of the economically active population. 50.6 % of the rural economically active population that is 60 or older still works. Among them, 91.0 % are engaged in agricultural activities. In terms of employment type, 56.6 % of the rural working population engages in agricultural work while 43.4 % is employed in non-agricultural work.