Hou Liqiang

China Daily (Hong Kong) - - CHINA -

In 2001, Wup­ing county, Fu­jian prov­ince, pi­o­neered re­form of the col­lec­tive own­er­ship sys­tem for wood­land, and reaped great re­wards by al­lo­cat­ing forestry as­sets to in­di­vid­ual fam­i­lies.

The county’s ex­pe­ri­ence is now be­ing pro­moted na­tion­wide and re­form is con­tin­u­ing. In the lat­est round, the county gov­ern­ment has been in­stru­men­tal in es­tab­lish­ing vil­lage co­op­er­a­tives that help farm­ers to se­cure loans and start busi­nesses re­lated to the forestry sec­tor.

Al­though it is against reg­u­la­tions for co­op­er­a­tives to of­fer credit guar­an­tees, some of­fi­cials are pre­pared to turn a blind eye and sat­isfy de­mand from lo­cal res­i­dents.

In 2015, Zhong Xin­wen wanted to ex­pand his plant nurs­ery. How­ever, he owned very few forestry as­sets so the only way he could ob­tain a loan was to find four peo­ple, in­clud­ing two public ser­vants, who would of­fer credit guar­an­tees on his be­half. Af­ter spend­ing three months vis­it­ing all the public ser­vants he knew or had ever been in­tro­duced to, Zhong only man­aged to find one per­son who was pre­pared to help.

The 51-year-old res­i­dent of Yuand­ing vil­lage in Wup­ing de­spaired, and was on the verge of aban­don­ing his ex­pan­sion plans when he heard that a bond­ing co­op­er­a­tive was be­ing set up in the vil­lage that would pro­vide credit guar­an­tees for loan ap­pli­cants.

Zhong was de­lighted to find that the co­op­er­a­tive made his life eas­ier by ar­rang­ing a 100,000 yuan ($14,680) loan in less than a week and that only one per­son would be re­quired to use their forestry as­sets as col­lat­eral for his ven­ture.

The money he re­ceived al­lowed Zhong to ex­pand his nurs­ery by nearly 3 hectares, which helped raise his in­come “by a sub­stan­tial amount”.

Credit guar­an­tees

Zhong is one of nearly 300 farm­ers the co­op­er­a­tive has helped to ob­tain loans. It was es­tab­lished as a re­sult of a guide­line is­sued by the county gov­ern­ment in 2015 that was aimed at en­cour­ag­ing bond­ing co­op­er­a­tives to be set up in ru­ral ar­eas.

Un­der the guide­line, the Wup­ing gov­ern­ment gives co­op­er­a­tives 10,000 yuan to cover op­er­at­ing ex­penses, and the equiv­a­lent of 1 to 2 per­cent of the value of each loan as fu­ture fund­ing. The move re­sulted in the co­op­er­a­tive be­ing set up in Zhong’s vil­lage as a pi­lot project. It is the only one in Wup­ing, al­though about 10 more have been es­tab­lished in other parts of the prov­ince.

Us­ing 2 mil­lion yuan pro­vided by 22 vil­lagers as se­cu­rity, the co­op­er­a­tive has helped more than 280 farm­ers ob­tain bank loans to­tal­ing about 40 mil­lion yuan, ac­cord­ing to Li Dex­iong, the co­op­er­a­tive’s di­rec­tor gen­eral. The se­cu­rity fund has now grown to 6.5 mil­lion yuan, and the 22 back­ers are en­ti­tled to a share of the co­op­er­a­tive’s prof­its, de­pend­ing on their con­tri­bu­tion to the fund.

As part of a pol­icy to en­cour­age the de­vel­op­ment of forestry-re­lated busi­nesses, the gov­ern­ment also cov­ers 3 per­cent of any loan that has an an­nual in­ter­est rate of 5 per­cent or higher, ac­cord­ing to Li.

Credit guar­an­tees for loan ap­pli­cants re­quire the ap­proval of a panel com­posed of five mem­bers of the co­op­er­a­tive, who com­mu­ni­cate via WeChat. That means there is no need for them to hold meet­ings, and all in­for­ma­tion re­lated to ap­pli­cants is dis­trib­uted and dis­cussed via a pri­vate WeChat mes­sage group.

China em­ploys a quota sys­tem for tree felling. Un­der the sys­tem, farm­ers can cut down some of their trees 10 years af­ter they have been planted, but a per­son’s en­tire al­lo­ca­tion can only be felled 26 years af­ter plant­ing, which means it takes a long time for the farm­ers to profit.

In light of this time lag, the county gov­ern­ment has ex­plored ways to help ru­ral res­i­dents to ob­tain bank loans by us­ing their forestry as­sets as col­lat­eral, al­low­ing them to start busi­nesses re­lated to the forestry in­dus­try and pro­vide in­comes to tide them over un­til the time they can be­gin log­ging op­er­a­tions.

Chen Jian­min, di­rec­tor of the Wup­ing forestry own­er­ship ser­vice cen­ter, said his de­part­ment sug­gested that the co­op­er­a­tive should be set up and op­er­ated by farm­ers be­cause the res­i­dents know their neigh­bors’ credit records and the value of their as­sets.

The model means ap­pli­cants avoid a num­ber of com­pli­cated pro­ce­dures, in­clud­ing forestry eval­u­a­tion and credit checks, and short­ens the time be­tween ap­ply­ing for a loan and re­ceiv­ing the funds from about 20 days to about three.

The greater con­ve­nience pro­vided by the co­op­er­a­tive in Yuand­ing has at­tracted clients from other vil­lages.

Last year, Chi Liangchang from nearby Xianxi vil­lage, se­cured a loan of 200,000 yuan via the co­op­er­a­tive. He used the money to plant more trees,


Zhong Xin­wen (mid­dle) signs a loan agree­ment with the bond­ing co­op­er­a­tive in Wup­ing county, Fu­jian prov­ince.


A man feeds chick­ens in a clear­ing in Wup­ing.

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