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Instructing a national conference on promoting rural financing service, Li stressed on modernizing agriculture.
“Boosting financial services for farmers, agriculture and rural areas has great significance for ensuring food security, building modern agriculture, raising farmers’ incomes and narrowing the urban-rural gap,” Li said.
China will encourage establishment of rural-focused venture capital (VC) and private equity (PE) funds to provide more capital to rural projects in an effort to nurture expansion and innovation in new products, a government document published on Tuesday said.
Beijing will deepen rural financial reform, increase agriculture-related lending and intensify policy support, the Chinese premier said.
He also urged financial institutions to strictly implement the policy of differentiated reserve requirement ratios and improve mechanisms for financial supervision and risk management.
To boost liquidity supply to rural areas, the document said, the government will reduce the amount of cash that rural banks have to keep at the central bank.
Echoing the document, the central bank announced on Tuesday that it will cut the reserve requirement ratio for county-level rural commercial banks by 2 percentage points and that for rural credit cooperative unions by 0.5 percentage point starting from Friday.
Vice Premier Ma Kai said at the conference that China should give full play to different types of financial institutions in rural areas, including rural credit cooperatives, development bank and commercial banks.
“The country should encourage and guide private capital to enter rural financial sector,” Ma said.
The government announced last month that it will increase its 2014 budget for farming subsidies by 10 per cent from last year’s 1.6 trillion yuan ($261.09 billion). China, however, has seen large-scale migration of farmers to cities even as rapid urbanization threatens to encroach on arable farmland.
China’s planning commission has called for 70 per cent of the country’s nearly 1.5 billion population to be living in cities by 2025.