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Slow Development in Rural Consumption Credit
As a large agricultural country, the biggest consumer group in China is concentrated in rural market. Various reasons affect the development of rural consumption credit, the restricting factors being the following two-folds: the consumers' side and financial institutions.
The problem of conception: affected by traditional lifestyle, Chinese residents have formed "an idea and habit of thrift consumption of keeping expenditure within the limits of income", with saving rate of residents ranking the first in the world. The peasants are the typical, representing this sort of consumption model. To them the idea of consumption in advance is psychologically unacceptable.
Low Income of peasants makes them low ability in general to afford debts. Survey shows that in the 6000 billion yuan of deposit balance, the ratio the peasants account for is as low as 20% in spite of the huge rural population of 0.9 billion. With a strong demand but a weak purchasing power, the overall consumption level is generally low. A survey of an ordinary farmer's with four persons indicates that it has an annual income of 3800 yuan while the annual average expenditure is 4000 yuan, making him a bit in the red without taking abnormal factors into account. The low income and consequently low credit level contains the development of consumer credit.
The complicated loan procedure: as the consumer credit is still in the beginning in China, many accompanying mechanisms are incomplete, thus unable to provide effective guarantee against risks, making the financial institutions very cautious on granting consumer credit. Therefore, the procedures required are complicated, usually affixed with rigorous conditions yet the duration, interest rates and varieties fall short of people's expectation, retarding lots of peasants.
Insufficient total credit funds: in recent years, influenced by macroeconomic policy, such as continually declining interest rates, the levying of interest tax and implementing of the system of real name for savings, the saving deposits of financial institutions drop to a varied extent. In addition to the situation in which credit assets are of low quality and serious losses incurred due to the long influence of a planned economy, the total credit funds are insufficient, thus affecting the injection of consumer credit funds.
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