Let 1,000 Rural Banks Bloom in China Vivian Wai-yin Kwok, 07.30.09, 06:02 AM EDT China sends further help to the countryside.
With 20 million unemployed migrant workers sent back home to rural villages worrying about how to fill their rice bowls day after day, China has an urgent need to channel more capital to its least developed areas to prevent the impoverished from taking their hatchets and hoes to vent their anger in riots.
So the Chinese government is planning to increase the number of rural banks over tenfold to 1,027 by 2011. The development will be particularly focused on counties in central and western China where most people are farmers with little access to financial and loan services, the China Banking Regulatory Commission announced Wednesday on its Chinese Web site.
The present 100 rural banks, plus, seven rural lending companies, 11 credit co-operatives, and a couple of hundred of mirco-lending companies are far from adequate to satisfy the financial needs of China’s nearly one billion farmers.
In 2008, only 60% of about 120 million rural households in financial difficulties were able to borrow; and only about half of rural agricultural enterprises were backed by banks, Xinhua News reported earlier this year, citing research from Tsinghua University in Beijing.
The Tsinghua survey estimated there was a 1 trillion yuan capital gap within the rural financial market last year. The China Development Bank has also forecast the capital gap in rural areas would reach 5.4 trillion yuan by 2010 and 7.6 trillion yuan by 2015 if the situation remained unchanged, the state media added.
Should China fail to channel more capital to help needy farmers -- whose per capita income is about one-third that of urban dwellers -- the severe income gap will likely prove troublesome for President Hu Jintao because it could spark social unrest.
How would this news channel more profit to YTEC. Majority of the population live in rural area is poor with no access to internet because they are poor. Ever since they anounced they want to expand to the rural banking, expansion has been slow, revenue and profit has increase mildly in the past five quarter. They cannot beat their own earning & revenue increase projected by management last year. So far this year, 1st quarter result in-line with street expectation eventhough they express .86 to .90 EPS in current year, which is at least four penny higher than street estimate. If they can not beat by a good margin in the current second quarter, price might even erode further. S & P ran up already 5% in the past five days, all I see is more selling at $ 8.50, low daily volume, practically no news at all in the past three months. They make special effort to reclassify financial statment on merchant card performance which is still loosing money & is not significiant to the bottom line. No news and lack detail on the expansion of SAP platform E-banking market. Unless management can provide more specific detail future plan for investor and projected outcome, investor has been loosing interest in this company, Longtop have average volume over half a million and YTEC in trading 10 times thinner than Longtop.