By Li Wei, Development Research Center of the State Council

In his speech made at China's Rural Financial Development Forum, Li Wei, DRC President, pointed out that after China's economy has entered a state of new normal, the changed financial environment has raised new requirements for rural financial service and brought new challenges for rural financial service institutions. The new tasks and challenges brought about by the new circumstances call for deepened reform. According to Li Wei, with China's economy entering a state of new normal, the driving force for China's economic growth has changed. Under the new situation, the foundation and conditions for rural financial development are also undergoing changes. In particular, the service targets and the traditional connotations relating to rural financial service have been extended, which requires that financial institutions should not only meet the financial demand of new targets such as family farms and specialized cooperatives, but also provide more effective financing for new-type urbanization, new countryside construction, and rural infrastructure construction. Li Wei also pointed out several new challenges brought about by the changed financial environment for rural financial service institutions. 1. As downward pressure on economic growth increases, credit risks for small and micro agriculture-related businesses will go upward. 2. The transformation in the mode of agricultural production has changed the demand structure of rural financial services. 3. The cost of capital is increased for small- and medium-sized financial institutions against the backdrop of a market-based reform of interest rates. 4. With the development of agricultural modernization and new finance, new types of financial services are entering the rural financial service area. Li Wei held that the new tasks and challenges brought about by the new circumstances demand further reform. The key to addressing the issue of rural finance lies in system and mechanism reform, and rural financing could be promoted through reform and innovation.