The World’s Largest Credit Co-operative System: Facing an Uncertain Future

Ralph Swoboda and Zhang Ruibin

China’s rural credit co-operatives (RCCs) are in the midst of a major reform whose outcome will determine whether they continue to be the world’s largest credit co-operative system. RCCs in wealthier areas have consolidated into rural commercial banks, but those in the poor, rural interior are still mutual in form. The authors report on an assessment of the RCC sector that is currently being conducted jointly by the People’s Bank of China (the Chinese central bank) and the World Council of Credit Unions, focused initially on RCCs in Guizhou Province. Their conclusion so far is guardedly optimistic: RCCs in Guizhou are beginning to function as true co-operatives, and, with appropriate changes in government policies supported by technical assistance, a co-operative model may be best-suited to meet the credit needs of subsistence farmers in China’s poorest provinces.