Microfinance and privatization in China

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Knowledge@Wharton looks at the growth and struggle of microfinance in China:

NGOs, including PlaNet Finance, ProCredit and CPAF, are making an effort to increase private sector activity. "Why did we get involved in this in the first place?" asks Gabrielle Harris, executive director of PlaNet Finance China. "It's because the banks were not willing to lend to people without collateral, and poor people in rural areas had no access to credit." To get city commercial banks and rural credit cooperatives involved, organizations like PlaNet Finance will have to first build up trust and convince banks that microfinance is a legitimate business with worthwhile returns. "It's not going to happen at the emotional level," she says, adding that her job is to convince local banks that NGOs have a good track record and that there is a potential for good partnerships.

Citigroup certainly is interested in the potential. The same issue of K@W looks at the country's privatization trends and guesses about the future.

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