China’s Development Policy Goes Rural

This I wrote for the Wokai blog, October 23, 2008.

I just came across this excellent clip from CCTV, highlighting how China has shifted the focus of its development to rural areas, with a focus on microfinance (hat tip to Rich Brubaker):

Last year, when I was working for the American Chamber of Commerce in Shanghai, I interviewed Wang Li from Citi, who appears in this clip.  She described how the Citi Microentrepreneurship Awards in October 2007 served as a stepping stone towards the broader expansion of microfinance in China.  I am impressed to see how quickly these changes have occurred.

China has also recently transformed its rural land policies, allowing farmers to trade or rent the land on which they work.

As writes Robyn Meredith in an interesting column for Forbes:

China is dramatically transforming policy for the nation’s 730 million farmers. For the first time since Mao collectivized farming in 1955, China’s farmers will have a free market for the land they till. This is a historic change for China, and lest anyone miss the significance, Beijing announced it on the 30th anniversary of the last major set of rural reforms, which marked China’s first steps towards capitalism. …

in the third quarter, China’s gross domestic product growth rate slipped to “just” 9%, lower than economists expected and down from last year’s 11.9% growth rate … Beijing has calculated that if China’s economic growth falls below 8%, there is a serious chance of political instability.

In other words, providing more options for rural development could create new opportunities for overall growth, beyond the export production that has been affected by the global financial crisis.  Rich Brubaker suggests that the impact could be huge for China’s fragmented agriculture industry, food distribution systems, and consumers.

One lesson that came up over and over in the business forums I attended in Shanghai is that aligning your organization’s objectives with those of the Chinese government is one of the most important things you can do.  So, for Wokai, this official support for both microfinance and rural development is especially excellent news!