4 the micro guaranteed loan for laid off and

4. The “micro-guaranteed loan for laid-off and unemployed people” operated by urban
commercial banks as required by the state authorities since the end of 2002.
5. Poverty aid microfinance program conducted by official financial institutions through
competitive tender, subsidized by the government in 200 poor counties since 2004. This
program is conducted jointly by RCCs and financial institutions.
6. Pilot programs of Microcredit Institutions (MCIs) funded with private capital conducted
in 5 provinces since the end of 2005.
More than RMB 200 billion has been invested in microfinance projects. Interest rates range
from the subsidized rates of 3% per annum for government-operated schemes to 16% per annum
for MFIs that seek financial sustainability. However, there is no conclusive report on the return
on such investments and the impact that these programs have had on gender inequality. In
China, information must be pieced together from the sparse information available on some
organizations’ websites and publications. Statistics such as average loan size, length of loan,
default rate, types of collateral, and the length individuals remain in business would be extremely
beneficial to understanding microfinance as a means of decreasing economic inequality. This
would also tell us whether microlending is a truly empowering tool for women.
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Innovation and variation in the types of microcredit programs offered in China is key
because of the uniqueness of different areas of the country; one model will not work everywhere.
Furthermore, microcredit is being used and promoted as a tool for unemployed workers, and
models must adapt to the needs of these workers.
The following sections explore the differences between various Chinese microcredit
programs and provides information about the contributions of international donors and the
government to microfinance in China. Given the limited amount of information available about
these programs and their impacts, we have chosen to include programs that target women
specifically, as well as programs that target the poor in general.
International Donors
United Nations Development Program
In June 1979, China signed a basic cooperation agreement with UNDP, and began to
receive the organization’s assistance. With the help of UNDP, China introduced the microfinance
scheme, and implemented projects in over 40 counties of 14 provinces on a trial basis in the mid
1990s. According to UNDP, these initiatives have effectively provided the poor with the access
to the poverty alleviation resources and have been further extended throughout the country. No
information was found, however, about the gender breakdown of the poor that have participated
in this microfinance initiative.
In 1998, the United Nations Development Programme (UNDP) and AusAID established a
business incubator in Tianjin targeted towards women. This project provided reemployment
training, and combined enterprise incubation with microcredit, with the aim of helping laid-off
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female workers to start their own business and become self-employed.