Looking at the piles of snow-white cotton harvested from his 18 mu (1.2 hectares) of fields, Niyazi could not help grinning. The 40-year-old farmer from northwest China's Xinjiang Uygur Autonomous Region will have a bumper harvest and a gleam of hope for a better life this year.

"I owe all this to the new rural credit system," said Niyazi.

Niyazi, a father of two schoolchildren from Xiaoyiluke Village,Xinhe County, Akesu Prefecture, was the support of a poor family. There was no way out when it came to the spring plowing season this year.

He netted 7,000 yuan (about US$1,023) from his cotton crop last year. But this spring, he needed that exact amount for seeds, fertilizers and plastic film for water-saving irrigation. To live or to plow, became the question.

There were banks around. But Niyazi had no collateral or guarantors.

"Aizezi came forth" when I was at a dead end, said Niyazi.

His savior, Aizezi, who worked at the local rural credit cooperative, came with a hammer and nailed a red iron slate on Niyazi's door.

Under a rural credit scheme that took effect in mid-2007 in Xinjiang, that slate, along with a little red book that was actually a loan certificate, meant that Niyazi would be able to borrow up to 10,000 yuan from the co-op.

Rural credit co-ops have functioned in China for decades as a major means of financing for local farmers. The one that helped Niyazi was the Xinhe Rural Credit Co-operative, which was formed with the support of local village heads.

It evaluates creditworthiness based on farmers' previous loan records (if any), farming activities and record of obeying the law. It doesn't ask for collateral or guarantors.

"We decided our mission was to elevate the credit standing of farmers by improving our small loan service," said Abudu, director of the Xinjiang Rural Credit Co-operative Alliance, of the alliance's formation.

By the end of 2007, about 91 percent of the farmers in Xinhe County, or 23,900 households, had credit files that divide them into three categories depending on how much they can borrow: 10,000 yuan, 20,000 yuan and 30,000 yuan. For this purpose, the co-op set aside 269 million yuan for loans.

"The little red book doesn't weigh much, but it's a life-saver to me," said Niyazi, who quickly got his loan.

Small loans for farmers

In Xinjiang, as in other parts of China, many farmers can't get loans.

"With loans, they might use their farms to build a better life. Without them, they will continue struggling under the poverty line," said Gong Weibin, a professor at the China National School of Administration.

Even credit-worthy farmers can find it tough and time-consuming to get loans. Local lending officers often take days to evaluate applications, as they're unsure of being repaid.

Through the co-ops, village heads provide something like a character reference for farmers when credit officers evaluate applications. They're involved through the whole process, until the loan is repaid. For their participation, they're paid about 1,000 yuan annually by the rural credit co-ops, or about 10 percent of the salary for a credit co-op staffer.

"Rural credit co-operatives are able to hire 10 qualified village heads on a part-time basis for the salary of one staff member and effectively lower costs," said Zhang Jian, head of Kashi Banking Regulatory Bureau.

Some village heads say this system makes for better relations with the farmers.

"Our duties used to have us collect all kinds of annoying fees from farmers. With this new mission, we are able to do something that really helps needy farmers and we become more reliable in the eyes of farmers," said Tu'erxun Wushou'er, head of the No.1 Village of Yikesu Township of Zepu County, who takes part in the system.

Although the co-ops do the lending, local governments help because the loans ultimately support their regions.

"Rural credit co-operatives are actually helping us to boost the local economy," said Yan Yongbin, head of Paixian Baibazha Township under Xinhe County.

The township sends three financial officials to work with the co-op for two months each year.

"With our support, the rural cooperatives are willing to take more risks," said Yan. In 2007, Xinhe's co-op extended 39 million yuan in loans to local farmers, up from 7 million yuan in 2005.

Local farmers have proven themselves reliable. For three years in a row, all their loans were repaid, including those extended before the scheme started. As of the end of June this year, the Xinhe co-op had lent 353 million yuan to local farmers, said Aini Wa'er, its president.

The loans helped the farmers improve their lives, with per capita net income of 4,061 yuan in 2007, 2.3 times that of 2002.

To date, Xinjiang has extended non-guaranteed loans to 980,000 rural households, or 46 percent of the total; 2,815 villages (38 percent) and 166 townships (19 percent).

In 2007, Xinjiang extended 30.4 billion yuan in loans to farmers, a net increase of 8 billion yuan year-on-year.

Greater lending scopre

So far, most loans from Xinjiang's rural credit co-ops have been used by farmers. But there have been others who benefit.

Farmer Yang Chunlan from Donggou Township, Dabancheng, borrowed from a rural co-op for her small restaurant. Yang has used her cooking skills to support her five-member family, as her 6 mu plot didn't yield enough.

She opened the shop in 1994. A decade later, wanting to expand, she turned to the Dabancheng co-op, which had a small loan program for female entrepreneurs. It was one of a dozen specialized credit services offered by the organization.

With a 1,000-yuan loan, Yang made her restaurant big enough for100 customers at a time. She borrowed and repaid several loans over the years, raising her creditworthiness along the way. She's now making enough from her restaurant to send her two children to a better school and put a second story on the building.

Yang and Niyazi are the people co-ops were intended to help. "We hope to extend the scope of our lending. Priority will be given to orchards and animal husbandry," said Wu Mai'errouzi of the Xinhe co-op.

Raising fruit trees is an investment and "the more you invest, the more you can harvest," said Yan.

Xinhe, which is in southern Xinjiang, has ideal conditions for growing walnuts, which can be planted along the ridges of cotton fields. Just 1 mu of trees might yield 300-400 kg of nuts a year and a handsome income, but it takes six years before the saplings mature.

"No farmer can afford to wait so long, without financing," said Yan.

Keeping credit in mind

One year into the credit-record system, Xinjiang farmers have become increasingly aware of the importance of their borrowing record, said Wang Huimin, who is an official of the Xinhe co-op. In Akesu City, rural co-ops' bad loans fell 97 percent from 2002 to just 60,000 yuan in 2007.

During the autumn harvest season, Xinjiang farmers stand in line to repay their loans. So far, nearly 1 million farming and herding households are classified as trustworthy, said Abudu.

Niyazi, who expects to sell his cotton crop for about 26,000 yuan, is eager to repay his loans.

"We see the red iron plates on neighbors' doors. We farmers are highly sensitive to our reputations. Who doesn't want a good credit rating?" he asked, adding: "Lads who don't have a red plate on their door, won't find a girlfriend in our village."

(Xinhua News Agency August 26, 2008)