Experts on Monday called for a new agricultural financing system which includes more diversity of channels for farm loans to meet the increasing demand for capital in rural areas.

At a forum on agricultural financing, which opened here Monday, more than 30 senior experts and government officials agreed that the biggest problem in agricultural development was a shortage of capital. In the past, the government was the main investor in Chinese agriculture.

"To build a comparatively well-off society in rural areas, a new agricultural financing system with farmers as the core players should be set up," said Li Jiange, deputy director of the Development Research Center (DRC) of the State Council.

Last year, loans for farming projects accounted for about 5.4 percent of the national total, while those for township enterprises accounted for 5.2 percent. However, farming and township enterprises together contributed 46 percent of the country's gross domestic product (GDP).

Meanwhile, only 25 percent of farmers had experience of getting loans from government financial institutions.

Tang Renjian, director of the Rural Bureau of the Office of the Central Financial Work Leading Group, said loans for farmers were mostly small and lacked guarantees.

"State-owned financial institutions find it hard to satisfy the needs of farmers. That's where the private lending system comes in, " said Tang.

Incomplete statistics show that 50 to 60 percent of farmers had loans from unregulated lending organizations. Tang called on the government to work out measures to guide the development of non- financial institutions, especially unregulated lending organizations.

Meanwhile, Han Jun, director of the Agricultural Economics Research Department of the DRC, said loans by rural credit cooperatives should also be regulated. By the end of June, the outstanding loans in the rural credit cooperatives were 696.6 billion yuan, accounting for 83.8 percent of the total agricultural loans in the country.

They held that though the contribution of the agricultural sector to GDP had decreased over recent years and was expected to decrease further, the sector was still the base of the national economy and should be treated accordingly.

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