funded with financial sources such as international donations and soft loans, with little involvement of government financial support. efforts were focused on the feasibility of introducing into china the micro credit scheme developed by bangladesh under the initiative of ‘ village banking ’. in mainland china. and all the micro credit business was conducted by the semi - government or private institutions. second, business expansion ( from october 1996 to 2000 ). while continuing to benefit from the international financial assistance, the chinese government stepped in to provide financial support with fiscal funds and poverty - reduction interest subsidy loans to strengthen policy - based micro credit business operated jointly by government bodies and financial institutions ( the agricultural bank of china ), aimed at realizing the targets set for poverty reduction by the year of 2000. third, institution building and full engagement of rural financial institutions ( from 2000 till now ). promoted by the people ’ s bank of china, rural credit cooperatives ( rccs ), as the formal financial institutions, fully launched and explained micro credit business. in this period, based on the initiative of ‘ building credit households and villages ’, micro credit was extensively granted to farmers by the rccs with financial support of the central bank. starting from 2002, on the basis of the rccs experience in the rural areas, the chinese government has introduced micro credit scheme to support the reemployment and business start - up of the laid - off workers in the state - owned enterprises. micro credit scheme designed to promote poverty reduction and development is an effective way to widen access of the small and medium - sized enterprises farmers to credit in china. it also contributes effectively to the growth of labor - intensive enterprises and employment. under the steering of the state council, the people ’ s bank of china will coordinate closely with other relevant departments to further develop micro credit business. i. skills training will be strengthened for vulnerable groups so as to enable them make more effective use of micro loans. micro loans may not prove effective for people without production skills and entrepreneurial knowledge, and sometimes could even turn to be a disadvantage by plunging them into deep debt. we have come across such cases in our survey conducted in poverty - stricken areas. the local government extended poverty reduction loans to a farmer and helped him buy dozens of goats of improved breeds. however, due to the lack of breeding skills, the goats finally all died and the farmer was hence burdened by a debt of rmb 7, 000 yuan, which aggravated his poverty. therefore, the chinese government nowadays very much emphasizes on

marketbased development of the micro credit business. 4. training will be intensified for both the managers and working staff involved in micro credit business to enhance their effective technical support to the loan projects. meanwhile, efforts will be made on a continuous basis to foster a sound credit environment. with only a short history of successful development, micro credit business remains in its infant stage in the global sense, facing risks and challenges of various kinds. however, in our opinion, the introduction of micro credit scheme marks a revolutionary transformation of china ’ s poverty reduction policy from relying on relief support to that focusing on development and serves as an important way to aid the vulnerable groups in their strive to achieve prosperity. micro credit scheme has inspired the whole society to be involved in the effort of poverty reduction and is warmly received by the vulnerable groups as well. therefore, i am confident of the success of micro credit business in china as it enjoys both solid policy support from the government and wide participation by the society. we firmly believe that micro credit business will have a promising prospect in china, and will continue to develop in a rapid and healthy way. we are also looking forward to more participation by the private sector in foreign countries and the multilateral institutions in china ’ s efforts to reduce poverty, by helping us improve the organization and management of micro credit and explore useful experiences to promote its sustainable development, thus making valuable contributions to poverty reduction in china and in the world. thank you!