In order to implement the policy measures to support a new socialist countryside, the People's Bank of China (PBOC) has, after cross-regional adjustment, set aside a central bank lending credit line worth of 5 billion RMB yuan to support the rural credit cooperatives in western China and grain producing regions in their farmer household loans.

This is another effort by the central bank to provide central bank lending after setting aside 3 billion yuan credit line for the agricultural sector. Since the beginning of this year, the central bank lending for rural sector has totaled 8 billion yuan, reaching a record high.

Central bank lending for the rural sector is earmarked for rural household lending by rural credit cooperatives. Since its launching, such central lending earmarked for the rural sector, as a policy measure aimed at improving rural financial services, has played an important role in supporting the lending capacity of rural credit cooperatives, guiding the direction of rural credit, expanding credit access to rural households.

Between 1999 and end April 2006, the PBOC arranged a total of 128.8 billion yuan credit line for such lending, and lent a total of 1.0557 trillion to rural credit cooperatives throughout the country. As a result, agricultural loans of rural credit cooperatives increased by a large margin, with nationwide aggregate outstanding volume reaching 1.1668 trillion yuan at end April 2006, 3.3 times more than that in 1998.

In order to improve the efficiency of earmarked central bank lending and effectively guide lending to the rural area and agricultural sector, the PBOC has adjusted the regional allocation of earmarked central bank lending in favour of the western region and grain producing areas.

Since 2004, the central bank has redirected a total of 17 billion yuan's credit line in central bank lending earmarked for rural areas from the eastern region and developed areas to the west and grain producing areas. As a result, the credit line for the west and grain producing areas reached 117.6 billion yuan, accounting for 91 percent in the country's total. On the other hand, management of such lending has been improved to allow roll over use of credit line and extend the maturity of central bank lending in line with the cycle of crop and animal farming. At the moment, the maturity ceiling of central bank lending is three years and can basically satisfy the rural household lending demand of rural credit cooperatives.

This year is the first year of the strategy of building a new socialist countryside. The PBOC has made arrangement for further improvement in managing lending earmarked for the countryside and rural areas to support the building of a socialist new countryside and required the branches and sub-branches to improve rural financial services, promote lending to the agricultural sector and rural household.

In the management of lending earmarked for the agricultural sector, the PBOC has emphasized that the central bank lending should support rural credit cooperatives to satisfy household demand for credit and such lending should be linked with the performance of rural credit cooperatives in supporting agricultural sector and providing rural financial services.

At the moment, the PBOC has required branches and sub-branches to decide on the timing of providing central bank lending and its maturity in line with the local conditions in order to contribute to the building of a new socialist countryside.