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4.The “micro-guaranteed loan for laid-off and unemployed people” operated by urbancommercial banks as required by the state authorities since the end of 2002.5.Poverty aid microfinance program conducted by official financial institutions throughcompetitive tender, subsidized by the government in 200 poor counties since 2004. Thisprogram is conducted jointly by RCCs and financial institutions.6.Pilot programs of Microcredit Institutions (MCIs) funded with private capital conductedin 5 provinces since the end of 2005.More than RMB 200 billion has been invested in microfinance projects. Interest rates rangefrom the subsidized rates of 3% per annum for government-operated schemes to 16% per annumfor MFIs that seek financial sustainability. However, there is no conclusive report on the returnon such investments and the impact that these programs have had on gender inequality. InChina, information must be pieced together from the sparse information available on someorganizations’ 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 extremelybeneficial to understanding microfinance as a means of decreasing economic inequality. Thiswould also tell us whether microlending is a truly empowering tool for women. 14
Innovation and variation in the types of microcredit programs offered in China is keybecause 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, andmodels must adapt to the needs of these workers. The following sections explore the differences between various Chinese microcreditprograms and provides information about the contributions of international donors and thegovernment to microfinance in China. Given the limited amount of information available aboutthese programs and their impacts, we have chosen to include programs that target womenspecifically, as well as programs that target the poor in general. International DonorsUnited Nations Development ProgramIn June 1979, China signed a basic cooperation agreement with UNDP, and began toreceive the organization’s assistance. With the help of UNDP, China introduced the microfinancescheme, and implemented projects in over 40 counties of 14 provinces on a trial basis in the mid1990s. According to UNDP, these initiatives have effectively provided the poor with the accessto the poverty alleviation resources and have been further extended throughout the country. Noinformation was found, however, about the gender breakdown of the poor that have participatedin this microfinance initiative. In 1998, the United Nations Development Programme (UNDP) and AusAID established abusiness incubator in Tianjin targeted towards women. This project provided reemploymenttraining, and combined enterprise incubation with microcredit, with the aim of helping laid-off15
female workers to start their own business and become self-employed.