This is a blog about microfinancing trend, practice and resources in China. I am currently volunteering for Wokai, a financing institute for MFI orgnaizations in China. This is a journal of my work.

Monday, May 25, 2009

Wang Anshi (王安石) and Micro Credit in Song Dynasty

Call me a sino-centric pig ... but I just found out that micro credit was the subject of a famed reform in the Song dynasty (960-1172)

According to Wikipedia:
1069年宋神宗時,王安石任參知政事,推出了青苗法、農田水利法和募役法等新法。1070年升任宰相。由於新法中關於土地改革影響到地主與相關的官僚,變法遭到他們的強烈抵制,在民間由於改革推行難度大,反而對一般民眾的生活產生不利影響,又遭到知識分子的敵視

The so called 青苗法 was actually a credit-lending program design to help the poor. It requires local governments to set up mechanism to disperse surplus capitals and lend to peasants in need before planting and harvesting season.

The borrowers must come in a group of 10 with different grade of income yet providing guarantee for each other. The rate of the loans were between 20%-40%, comparable to micro credit loans today.

Again, thanks to Wiki:
規定凡州縣各等民戶,在每年夏秋兩收前,可到當地官府借貸現錢或糧穀,以補助耕作。借戶貧富搭配,10人為保,互相檢查。貸款數額依各戶資產分五等,一等戶不超過十五貫、二等戶十貫、三等戶六貫、四等戶三貫、末等戶一貫五百文。當年借款隨春秋兩稅歸還,每期取息2分,實際有重達4分(利息40%)的

Sadly the reform failed after just 10 years and Wang was widely condemned as a techno-hot-head.

However, I think the story just says how important rural credit is for Chinese peasants for centuries.

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This is a blog about microfinancing trend, practice and resources in China. I am currently volunteering for Wokai, a financing institute for MFI orgnaizations in China. This is a journal of my work.