Rural Finance Opportunities in China
By Alison Kennedy and Albert Chan

From the steppes of Inner Mongolia to the tropical islands of Hainan Province, half of rural Chinese households lack access to banks or other formal financial services. With central government blessing, that will change over the next decade. But Chinese and multinational players considering this vast and variegated market will need innovative marketing and business models, a taste for on-theground campaigning, and patience.

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Hidden in plain sight: the other economic miracle

The popular narrative of China’s economic rise has been overwhelmingly urban and state-sponsored, from glittering architectural wonders rising up in Shanghai to new high speed railway lines and the growing appetite for cars and branded luxury goods.

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Government investment and private finance have indeed focused mainly on the country’s large cities, particularly along the eastern coastal provinces. That’s just half the story. Rural China, with between 50 and 56 percent of the population, or close to 700 million people, has emerged from the shadows and come of age economically. This vast collection of farms, villages, and towns in secondary coastal and inland provinces is now attracting attention from the Chinese central government, multinational corporations, investors, and local companies. Many larger Chinese enterprises based in the developed eastern coastal areas have been moving into the middle and western rural areas, and these enterprises are relatively sophisticated customers for financial services. With the government committing a major share of resources to rural development and finance, banks and other financial services institutions have taken notice and are cautiously optimistic. To be sure,