Officials show cautious interest in Grameen's lending model

The awarding of this year's Nobel Peace Prize to Grameen Bank and its founder Muhammad Yunus, a Bangladeshi economist, may have given unprecedented impetus to the development of microcredit projects in China, but the mainland is still taking a cautious approach to the experiment.

The microcredit concept and the Grameen Bank model is not new to China, with Jiao Jinpu, deputy director of the People's Bank of China's research bureau, telling a conference that about 300 institutions had been operating different variations of microcredit projects - most of them small.

The first microcredit project using the Grameen model was introduced to China by a Chinese Academy of Social Sciences scholar, Du Xiaoshan , who started the experiment in Yixian county, Hebei province , in 1993 after attending a Grameen Bank meeting in Bangladesh. The academy's project was partly funded by Grameen Bank and now covers six counties.

In the 1990s, many institutions such as the United Nations Development Programme, UN children's fund Unicef, Asian Development Bank, Ford Foundation, World Bank, Hong Kong Oxfam, World Vision and the governments of Holland, Germany and Canada started microcredit projects and training centres across China. These institutions account for the bulk of microcredit in China, although some non-governmental organisations, including one led by famous economist Mao Yushi , have also started some smaller experiments.

The potential to use microcredit as a means of poverty alleviation in China is enormous.

Despite a huge rural population of more than 700 million, only a few banks have branches in the countryside and farmers face huge difficulties in securing loans from financial institutions, especially when collateral or even bribery is required to borrow money. It is an open secret that the lack of rural financial institutions has given rise to a large number of illegal lenders, many of them are loan sharks.