UNDP: Inclusive finance drives China's poverty reduction

“China has made a significant historical contribution to global poverty reduction, and in doing so has utilized many tools. In terms of financial inclusion and micro-credit, some of China’s innovative financing is definitely one of the essential drivers of its poverty reduction programs,” said Devanand Ramiah, deputy resident representative in China of the United Nations Development Programme (UNDP) in an interview with China.org.cn. 

Devanand Ramiah, deputy resident representative in China of the United Nations Development Programme (UNDP) is in an interview with China.org.cn. 

He explained that UNDP has carried out three generations of financial inclusion programs in China. In the 1990s, UNDP started with micro-credit loans, providing loans and few technical assistants and advisors, and introducing to China the Grameen Bank model. It was the first agency to introduce the concept of mircro-credit in China. In the 2000s, the concept evolved to financial inclusion; UNDP were involved by bringing in experience and expertise on financial inclusion to China. Then moving on to 2014-2015, the agency began to focus more on rural cooperative finance. 

During the second generation in the 2000s, UNDP worked with the People’s Bank of China and China Development Bank to establish a research project on financial inclusion policy recommendations.

“This is outside of the former banking system, and we are proud that the policy framework resulting from this project was adopted by the Chinese government,” said Ramiah. 

The highlight of the third generation was the Minfu Center which was established in poverty-stricken areas such as Yilong county, Sichuan province. It provided a one-stop shop for sharing information and building technical capacity, as well as providing funds and other resources.

China is far in advance of many other countries. But China has a unique governance system and policy environment, so practices that have been implemented in China cannot simply be transplanted directly to other countries, according to Ramiah. He proposes that China should provide ideas and studies on its experience. 

Ramiah believes that new advances in technology such as artificial intelligence, block-chain and new analytical big data tools for financial inclusion will have a big impact on the future development. “Moving forward, we need to remain prudent, and ensure that financial inclusion focuses on the most vulnerable people,” he said.