Enhancing Quality in Expanding Inclusive Finance

In recent years, inclusive finance has become a vital aspect of economic growth, especially in supporting small and micro enterprises, as well as agricultural sectorsThis approach is critical not only for boosting businesses but also for improving the overall welfare of the populationHowever, as the development of inclusive finance progresses, it is essential to evaluate its achievements, identify gaps, and build pathways for its high-quality evolution.

One shining example of inclusive finance in practice can be observed in the rural communities of China, particularly in the coastal areas where fishing and seafood industries thriveTake, for instance, Lin Hubin, a resident of Aojiao Village in Dongshan County, Fujian ProvinceLin operates a shop on a bustling "E-commerce Street" adjacent to the local fishing port, where he packs and ships fresh Dongshan seafood across the country

This industry is significantly seasonal, with fishing bans in place from early May to mid-August allowing the marine life to regenerateDuring the peak fishing season from mid-August to November, Lin experiences a surge in demand, necessitating swift access to financing for stockpiling seafood products.

“The seafood market is quite dynamic,” Lin explains“When the buying season kicks in, I need to secure large funds for purchasesWhen inventory runs low towards year-end, funds quickly rebound.” Recognizing this cash flow cycle, Lin utilizes Agricultural Bank's "Huinong E-loan," which he has relied on for several years“The loan is perfectly suited for micro-businesses like mine, with a flexible limit that I can check and borrow through mobile bankingMost importantly, I can repay whenever I'm ready without pressure,” he saysThis financial support has proven vital for Lin's business, helping him adapt to the fluctuating dynamics of seafood sales.

With robust financial backing, Lin ventured into live-streaming sales, leveraging digital platforms to boost his profits

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In 2021, after some experimentation, his live-streaming account generated 150,000 orders, racking up over 9 million yuan (approximately $1.3 million) in sales in 2023 aloneInspired by his success, many young people in his village have also embraced e-commerce, growing the number of such enterprises from a mere handful in 2016 to 117 by 2023. This burgeoning e-commerce scene in Aojiao Village amassed a total sales figure of 350 million yuan that same year.

Continuing to innovate, Lin is now shifting towards an integrated business model that combines “e-commerce plus seaside homestays.” He has opened a guesthouse near the fishing port, complete with a scenic view and amenitiesSince its launch this summer, the homestay has already generated over 1 million yuan in revenue, further contributing to the local economy.

Banking leaders recognize the importance of structuring financial products to meet farmers' needs

Lin Jiazhen, the president of the Agricultural Bank's Dongshan branch, stated, “We focus on refining our financial support policies to better serve farmers and enhance the efficacy of our agricultural financing.” Their proactive approach involves engaging with local farmers and enterprises to tailor financial services that cater specifically to their operational demandsBy the end of November, the bank successfully issued loans amounting to 31.92 million yuan to 60 agricultural households in Aojiao Village for various projects such as fishing boat mortgages and developing seafood breeding techniques.

At a broader level, the Chinese government has been strategizing to promote rural revitalization and urbanization in tandemA recent central economic work conference underscored the significance of merging urban-rural development while broadening income channels for farmersDongshan County, which ranks as the sixth-largest island county in China, has a longstanding tradition of aquaculture dating back to the 1950s when abalone cultivation first took root

Today, it stands as the largest abalone breeding base in China, supplying over 70% of the nation's juvenile abalones.

In Chen Cheng Village, farmer Chen Xisheng operates a family-run aquaculture facility, where hundreds of juvenile abalone pooling systems are in sightEach pool costs around 30,000 yuan, with the most advanced units reaching 50,000 yuanUnlike traditional businesses with predictable financial needs, aquaculture presents unique challenges, particularly because operators require substantial working capital to maintain operations independentlyTo address these necessities, the Agricultural Bank has refined its lending criteria using a more comprehensive assessment of agricultural infrastructure, enabling them to increase credit limits substantially—from a mere 100,000 yuan to 500,000 yuan for abalone farmers.

As a result of these adjustments, aquaculture operators have discovered newfound financial flexibility, allowing them to navigate fluctuations in prices for quality seeds and feed with ease

This year, the Agricultural Bank facilitated loans amounting to nearly 97.91 million yuan for 236 farmers focused on abalone breedingBy the end of November, the bank's total rural loan balance stood at 943 million yuan, with a reported increase of 260 million yuan since the year's beginning.

Experts argue that precision-centered, high-quality inclusive finance can be a catalyst for rural revitalizationFinancial institutions are encouraged to keep innovating and exploring new models to enhance service efficiency and address challenges faced in financing rural areas“Since the inception of inclusive finance practices, accessibility to financial services has improved significantly, especially in rural revitalization effortsSimultaneously, the cost of inclusive loans is witnessing a continued decline, enhancing borrower satisfaction among farmers and low-income urban communities,” noted Dong Ximiao, chief researcher at a financial think tank.

As inclusive finance expands both in breadth and depth, many small and micro enterprises have gained favorable access to financial resources

According to the People's Bank of China, the total balance of inclusive microfinance loans reached an astonishing 32.21 trillion yuan, marking a 14.3% year-on-year increase—an impressive sign of sustained growth.

This June, Yunnan-based Honghe Shiping Hongsheng Biotechnology Co., Ltd found itself struggling with liquidity as it invested heavily in new manufacturing facilities and extraction equipmentUnderstanding their predicament, the Agricultural Bank of Yunnan designed a tailored financing scheme to transform intellectual property into collateral assets, thereby alleviating the challenge of insufficient fixed asset guarantees.

The bank's regional president Li Yunpeng emphasized the importance of personalized engagement with small tech enterprises, noting that their team actively schedules outreach efforts to address unique financing needsBy judiciously utilizing data creditworthiness and technical assessments, they have expanded funding channels, resulting in a staggering 7.9 billion yuan in loans for small-scale businesses this year alone.

Looking ahead, inclusivity in financial development faces numerous challenges, necessitating persistent efforts to refine access to finance and stimulate demand

“Presently, disparities exist between urban and rural finance, among various bank scales, and between banking and non-banking sectorsThe depth and precision of inclusive financial coverage call for further enhancements,” stated Pang Ming, chief economist at JLL’s Greater China divisionHe staunchly advocates for financial structures that adequately compensate institutions while facilitating an effective long-term service mechanism for the vital small and micro-enterprise sector.

In light of China's vast and diverse landscape, rallying for equal financial growth remains dauntingThe ongoing quest involves striking a delicate balance to ensure that financing remains accessible yet sustainableEnsuring that monetary policies directly benefit the real economy, particularly for small enterprises, facilitates a smoother trajectory for inclusive financial developmentAs financial institutions innovate alongside the rapidly evolving digital landscape, the ongoing integration of technology could empower financial inclusivity further—shaping a healthier and more sustainable financial ecosystem for all.

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