China on road to reforming agri finance services

China will implement an agriculture micro-financing plan for the northern province of Jilin, the state-owned news agency Xinhua has reported.

There are 5,000 agribusinesses in the province, and 2,000 would benefit and could afford to pay back loans totalling 6.2 billion yuan, the Jilin office of the Chinese Banking Regulatory Commission and the People’s Bank of China in Jilin said on Monday.

The plans are meant to make it easier for foreign financial institutions to access Chinese markets.

The programme was implemented after the International Monetary Fund said the yuan will join its reserve currencies basket on 30 November, and is part of the government’s plan to smooth the way for the internationalisation of the yuan.

Jilin’s governor Jiang Chaoliang had been head of the Agricultural Bank of China (ABC) until he was appointed to the province last year.

A similar regional pilot project will be established in Zhejiang province to help small and medium-sized businesses access offshore funds, while the existing free trade zones of Guangdong, Tianjin and Fujian will undergo reforms intended to facilitate easier cross-border investment between China and Taiwan.

The yuan’s new reserve currency status is also likely to strengthen China’s appetite for investment abroad, including in the agriculture sector.

China’s Going Out policy has seen it sign several trade deals in recent months that will see more Chinese money flowing into foreign agriculture, particularly to Central Asian and African states, as well as Australia.

President Xi Jinping promised $60 billion of funding to promote development in Africa at a summit in South Africa this week, which would include agriculture and more affordable debt financing. Jinping had said his country would give priority to building modern agriculture supply chains in an earlier visit to Zimbabwe.