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The Origin and Role of Inclusive Finance in China

chinagate.cn, June 6, 2016 Adjust font size:

Q: What the role does inclusive finance play in China?

A: Inclusive finance is advocated by poverty reduction. It mainly targets the low-income, poor population. As a developing country, China aims to eliminate extreme poverty nationwide by 2020. Poverty alleviation is no easy task. At present, there are many low-income, poor people in urban and rural areas. A number of them make a living by themselves, while some of them work in cooperative organizations or micro & small enterprises (MSEs). The available formal financial institutions cannot provide efficient financial services to them, which mirrors the situation globally. Despite the fact that microfinance began growing rapidly after 2000, MSEs and farmers sometimes still found it difficult to borrow money. Though Internet finance renders financial practices more convenient, it's not easy to popularize Internet finance in rural areas. Around the world, a great number of innovative efforts on inclusive finance are made via informal ways, lacking a solid legal status and due inspection for sound growth. I believe financial inclusion in China functions in the following ways.

Firstly, China aims to build moderate prosperity in all aspects, and one important concept is to ensure that opportunities for growth and development including financial services are equally available to all. Previously I said that building an inclusive financial system was a key financial strategy and approach for realizing all-around moderate prosperity. I also mentioned that all-around moderate prosperity should be called inclusive welfare, as inclusive finance is matched with inclusive welfare.

Secondly, China's financial system is not complete, and there is room for reform and development even without the need to build inclusive finance. Financial inclusion fosters financial innovation from below and strengthens bottom-up interaction, shaping a comprehensive, inclusive and sound financial sector.

Thirdly, Internet finance is entering the mainstream of financial development. Inclusive finance and Internet finance have a lot in common, being open, inclusive and equal. Internet finance reaches the bottom of the financial sector, and heightens financial inclusion, while financial inclusion serves as policy guidance for internet-based financing.

The dialogue is translated by Zhang Ling.

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