ABSTRACT
Reforms in the Chinese fi nancial system have been slow relative to other reforms and, therefore, diffi culties continue to emerge in the fi nancial sector of the formal system supporting Chinese economic development. Two of the most serious problems are fi rst, formal fi nancing structures are not able to provide suffi cient capital for the development of private enterprises and the shortfall is signifi cant; second, they provide capital even less adequately for the needs of development in rural areas. Access to funding by rural households/farmers for non-productive activities such as purchasing durable consumer goods, house building, schooling for children, funeral and wedding expenses, medical care, etc., is almost nonexistent. Formal savings and loan structures are absent. As a result, with the rapid growth of the private and rural economy in recent years, informal fi nance has been gradually resuscitated in various forms in both rural and urban areas. It is playing a more and more important role as a key supplement to formal fi nance during the critical period of reform and opening up of the Chinese economy. Despite the many restrictions imposed on informal fi nance by the government, various informal fi nancial institutions and organizations are playing a key role in real life.
