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From Chinese Press

Securities not very secure

(China Daily)
Updated: 2010-04-30 07:52

The China Securities Regulatory Commission (SCRC) is conducting a survey on "securities investment demand and situation in rural areas" with the aim of tapping more securities investment potential. But more than anything else, rural people need investment and small-amount credit loans, says an article in East Morning. Excerpts:

The government policy of taking securities to rural areas is different from "home appliances and agricultural machinery going to the countryside" that, among other things, has helped China emerge out of the global economic recession. So it is important that the SCRC conduct an industrial survey across the nation, especially among farmers in the costal regions who have had a strong interest in investment and financing.

What has left many people worried is the possibility of the securities investment demand being exaggerated because the survey was reportedly left to securities traders to finish.

Trying to create a wider market for securities in rural areas without educating people against investment risk would bring more harm than good, given the current imperfect securities market. Rural finance is the most vulnerable part of the financial system and, rural economic development is largely constrained by the lack of adequate funds.

Moreover, rural credit cooperatives, postal savings institutions and rural branches of State-owned commercial banks have taken large numbers of deposits and remittances from farmers. But they have seldom granted loans to them, resulting in a lot of money being pulled out of rural areas.

We hope financial authorities would step up their efforts to establish a deposit insurance system in rural areas, developing an agricultural futures market and agricultural insurance market, promoting made-to-order farming and resolving the difficulties facing farmers in getting loans.

(China Daily 04/30/2010 page9)