China urged its banks to speed up lending to agriculture, the country’s banking regulator said on Tuesday [3 March 2015], in an effort to bolster a sector that employs almost one third of its 1.4 billion people, but remains in desperate need of funding. Policymakers have cut interest rates, increased lending targets and freed up banks’ reserves to lend more, but this has done little for farming, which produces some 9 percent of China’s GDP, though with low productivity…Full Article: China Daily Mar 2015

Key Point

  • The China Banking Regulatory Commission (CBRC) is urging domestic banks to improve rural lending services and give more financial support in order to modernize the country’s agriculture sector.

ChinaAg Comments

  • In December 2014, the Chinese government announced that it would extend tax breaks on interest revenues banks generate from loaning money to farmers (i.e. revenues are exempt from sales tax and corporate income tax, and tax will only be paid on 90% of interest revenues). In addition, the PRC government announced that the ceiling amount for small loans to farmers will be raised from CNY 50,000 (US$8,130) to CNY 100,000 (US$16,275). Lastly, the 3% discount on sales tax (county level payable) from insurance was extended through the end of 2016.
  • In March 2014, China’s central bank announced the establishment of a credit system for serving small and micro-sized companies and farming households. The system, which will aid farmers to receive small loans, was to be piloted in 31 cities and 32 counties, including Gaoling County, Shaanxi Province.
  • In February 2014, China’s central bank announced they will institute customized financial services in order to modernize farming practices. For example, farmers who cultivate fruit or other crops will long growth cycles will be eligible to receive loans that have a maturity length of up to 10 years.

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