Hongqing Chen
Hongqing Chen, a Portfolio/Risk Manager, recently joined Wokai’s Seattle Chapter. The article below is a translated version of this article from the Xinhua Daily Telegraph. You can reach her at hongqingc @ gmail.com.
Niaz, a 40 year old peasant, lives with his family in Shaoyiluke village, in the Xin He County, Xinjiang Uighur Autonomous Region. This is China’s vast northwestern province, which borders on Kazakhstan. He grows cotton on about 3 acres of land.
Photo of cotton in Xinjiang from chanmelmel on Flickr.
In 2007, he sold his cotton harvest for RMB 26,000. After paying off a loan for seeds, fertilizer, and pesticides, his net profit was RMB 7,000. His family used this income to pay for their two children’s school expenses and their daily expenditures. At the beginning of 2008, he needed a new loan to purchase more seeds, fertilizers, and pesticides.
By normal banking standards, Niaz would not be eligible for a loan, since he does not have collateral or a guarantor. Shaoyiluke’s agriculture credit union, with two loan officers, serves peasants like him. Those two loan officers could not know every peasant family well as there are several thousands of families like Niaz’s.
Photo of Uigher men in Xinjiang by centralasiatraveler on Flickr.
In order to provide effective evaluation without a huge staff, Xin He County has developed a village credit system. The village, town government, and credit union jointly elect trustworthy people to form a credit evaluation group. They look over lending records, production and business process, and lawfulness of each peasant to determine a credit grade in three levels (1A, 2A, and 3A) and issue each peasant a credit lending certificate.
In Shaoyiluke village, every family has a prospective credit grade nailed to their front door. 1A signifies a lending limit of RMB 10,000, 2A signifies 20,000, and 3A 30,000. At the end of 2007, 23,900 families (about 91% of total residents in Xin He County) had credit records and grades.
Now, peasants like Niaz can go to credit union and present their certificates to get a loan within half a day. Xin He County Agriculture Credit Union lent out RMB 353 million with zero default rate in the past three years. Peasants are very diligent in paying back their loans. As the Shaoyiluke village leader put it: “Peasants actually are the most trust worthy people. Who does not care about face? Those families with no credit certificate on their doors cannot even get girls to marry their sons.”
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