ADB PPTA: Gansu Featured Agriculture and Financial Services System Development Project, Gansu Province, Peoples Republic of China

China Rural Finance: Gansu Province

In 2014, Jock Struthers was engaged as the International Rural Finance Expert in an ADB team of international and national consultants preparing an integrated rural development project covering 12 counties in Gansu Province.

Gansu Province, located in the Northwest of the People’s Republic of China, lies between the Tibetan and Mongolian plateaus with the Yellow River passing through the southern part of the province and capital Lanzhou.

Gansu is one of the poorer and higher altitude provinces, characterised by extreme climatic conditions, low rainfall and numerous small uneconomic farms from which working aged males predominantly work off farm on construction or other activities.

Typical landscape near Lanzhou.

In an effort to attract commercial banks into lending to farmers, the Gansu Local Government applied for an ADB loan of US$100m, to provide lending capital and technical support.

The huge challenge for the project was in overcoming entrenched attitudes favouring government subsidies by value chain and government actors and incorporating ADB social and environmental requirements in a commercially acceptable manner. The overriding need was to promote co-ordinated and profitable production and marketing activities that could attract commercial banking activity.

Extensive visits to horticulture, sheep and beef cattle farms indicated a potential to usefully finance farm improvements for production increases and local processing, but that the proposed ADB loan, relative to the scale of the provincial needs, was likely to provide significant ongoing challenges for the local government as it sought to scale up the benefits.

The team also visited farmer co-operatives and livestock farms.

The Tasks included:

Farmer Survey: A socio-economic survey was undertaken of numerous farmers throughout target counties.

Meetings: Held with officials in every county visited. Numerous meetings with the full team, local government and ADB representatives were held in the provincial city of Lanzhou as strategy was developed.

Rural Banks: Numerous commercial and specialised smaller rural banks were visited in each county to assess their lending policies and requirements to encourage increased rural lending and to assess the capability and interest of local banks in developing rural lending activities, including the provision of microfinance.

Result: The ADB subsequently approved a loan of US$100m to the Gansu Provincial Government, to implement a program of rural development.

Gansu International Conference on Rural Finance Development:

An International Conference on Rural Finance Development was held in Yuzhong, (near Lanzhou) on September 5th 2014 where Jock Struthers was keynote speaker.

Jock Struthers, keynote speaker, spoke about the practical requirements of providing rural finance services, summarised as follows:

  • Sustainable Rural Finance requires profitable value chain development.
  • Rural Bankers need to have suitable agricultural qualifications and training to be able to properly appraise a farming operation.
  • Rural Bankers must be prepared to “get their boots dirty” and understand the business of farming. They must be able to assess site suitability and the effective production area.
  • Farmers need to understand the requirements of banks and learn to keep proper production and financial records.
  • Farmers should be shown how to minimise borrowing through savings and good cash flow management.
  • Rural Finance, especially microfinance is more expensive to provide than regular commercial bank finance. While the popular focus is on interest rate, access to finance and affordability is the main consideration.

International and Chinese team members travelled to numerous farming areas of the province to assess socio-economic, environmental and water management as well as farmer and rural finance requirements.
Ms Bai Li (Lilly) from the local Project Management Office interprets

The team visited larger scale horticultural developments ...

... and smaller scale vegetable growers ...


Farmer interviews:


Processing factory visit

Farmer Utility Transport




County Rural Bank

Visit to a new, remote, Muslim Microfinance Bank

Microfinance Bank President