Blog about Virtual Assistant, Outsourcing, KPO, BPO and China

Today witnessed a dramatic fall of yuan in seven weeks, according to the China Foreign Exchange Trade System. It is the biggest drop since May 27. It is also the first decline in three days after a report today showed China’s economic growth cooled in the second quarter, increasing pressure on authorities to switch from fighting inflation to protect exporters. Before that the central bank had set a weaker daily reference rate, suggesting that it is seeking to boost growth and deter speculators.

Gross domestic product grew 10.1 percent in the second quarter from a year earlier, the slowest since 2005, compared with a 10.6 percent pace of growth in the first three months of the year, the statistics bureau said today in Beijing. China will likely allow the yuan to appreciate more slowly and relax controls on fuel price increases. As reported some export oriented industries has tried to persuade the government to rein in currency gains and increase export-tax rebate.

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China Finance and Banking dollar, increasing pressure, to protect export, yuan

Some Microcredit companies are going to be launched in Zhejiang province in July to cater to small and medium-sized enterprises’ demand for capital. It is said to standardized and regulate private capital, each country in the province will have one to two microcredit companies.

Microcredit has a 14 year history in China. In October 1993, the government introduced MF, modeled from the Grameen Bank, as part of the poverty alleviation initiatives. Since then three main players have immerged – CFPA, CASS (Chinese Academy of Social Sciences) and CICETE (China International Center for Economic and Technical Exchanges), along with their international backers. All of these players have focused on using Grameen styled MF as a poverty alleviation tool for rural China, to varying degrees of success.

Today there are over 300 small microfinance pilot projects, few of which are financially sustainable. CFPA is the only one which has brought all its project sites together in a branch model. Till now microcredit association has not been able to become a legal entity due to the lack of relevant registration framework, as their members are unable to become legal financial institution. Due to this lack of registration, microcredit association’s activities are limited to some training courses, and promoting NGO microfinance regulations negotiations with the relevant government bodies. China is considered one of the last frontiers for microfinance. The market is huge, the existing providers are not providing good service and most are not sustainable.

Concerning the to be built microcredit companies in Zhejiang, microcredit lenders will be chosen from quality private enterprises whose net assets should be no less than 50 million yuan, asset-liability ratio less than 70 percent and those that have been making profits for three years in a row, with revenue higher than 15 million yuan.

The project is launched at this time when small enterprises facing financing difficulties caused by factors like soaring raw material process, and tightening monetary policy. Statistics show that because of the credit crunch, most small and medium-sized enterprises have to resort to the private lending market.

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China Finance and Banking financing difficulties aid, Microcedit company, SME, Zhejiang Province