Financial Supply and Establishment of Inclusive Growth Mechanism in Poverty-stricken Areas:
Practice and Experience of the Bank of Inner Mongolia

Yang Chenglin, President of the Bank of Inner Mongolia

Distinguished Leaders, Guests, Ladies and Gentlemen,

Good afternoon!

It is my great pleasure to attend the “1017 Poverty-reduction & Development Summit Forum for 2009” and to exchange views and experience on financial supply and establishment of an inclusive growth mechanism in poverty-stricken areas with you on behalf of the Bank of Inner Mongolia.

17 years has passed since Oct. 17th was chosen as International Day for the Eradication of Poverty by the 47th Session of UN General Assembly in 1992. During the past 17 years, thanks to the great promotion of the United Nations and the unremitting efforts of governments, positive achievements have been made in poverty reduction worldwide and steady progress made in response to major challenges to mankind development in various areas. In China, with sustainable, rapid economic growth and the constant improvement of people’s living standards, the poverty-stricken population is shrinking substantially. Particularly thanks to the program of development-oriented poverty reduction, the goal of reducing the population in dire poverty by half set in Millennium Development Goals (MDGs) has been achieved ahead of schedule, making positive contributions to international poverty reduction.     

I  Connotation and establishment of an inclusive growth mechanism
As is well known, poverty reduction is attributable to both growth and distribution, the former being the basis and the latter the guarantee. Sustainable poverty reduction can only be achieved by integrating the production and employment of the poverty-stricken population into the progress of growth in a sustainable and balanced manner to promote inclusive growth, or economic growth with an increasingly equitable distribution of income.

Economic growth is attributable to increase in elements, technical innovation and increase in the efficiency of resource allocation. In the market economy system, economic growth is specifically attributable to investment increase, human capital accumulation, technical advance, optimization of economic structure, improvement of infrastructures, increase in the efficiency of elements and products in the market, and improvement of economic system and policy. Plagued by insufficient materials, human capital and funds, poor conditions and environments of production and employment, and discrimination of social and economic rights, people in poverty-stricken areas are often unable to equally participate in economic growth or to benefit from it, leaving them in a “vicious circle of poverty” and a “trap of low-level equilibration”.

Inclusive growth aims to eliminate the defects of factor endowments in poverty-stricken areas and population, improve the manner, condition and environment of their production and employment, intensify the guarantee of their production and life, equip them with basic capacity and opportunities of development, and help them achieve sustainable, balanced growth together with those areas and population free from poverty.

To achieve inclusive growth, a set of systems and policy interventions should be put in place, including asset allocation, industrial development, job creation, public service, establishment of social security systems, assistance of regional development, and construction of market systems. On a microscopic level, we should improve the factor endowments of the poverty-stricken population and optimize their transaction manner, condition and environment; on a macroscopic level, great effort should be made to achieve sustainable, steady economic growth, gradually optimized economic structure, coordinated development between rural and urban areas, among regions and departments, and balanced progress in social development and economic growth.

II  To provide financial service to poverty-stricken areas is the key to the establishment of an inclusive growth mechanism

Insufficient fund supply is an important aspect of deficiency in factor endowments in poverty-stricken areas, restricting the improvement of their development conditions and environment, the enhancement of their development capacity, and the establishment of their inclusive growth mechanism. Therefore, addressing the problem of insufficient fund supply is an important measure to reduce poverty.  

First, providing financial service to poverty-stricken areas can improve their infrastructures as well as their production and living conditions, and enhance their development capacity;

Second, providing financial service to poverty-stricken areas can improve their investment structure, promote industrial development, increase their sources of income, and raise the income of the impoverished population;

Third, providing financial service to poverty-stricken areas can improve the ability of the impoverished population to respond to social, economic and natural risks, improve the conditions of family education, sanitation and provisions for the old, secure fundamental social protection, and strengthen their capacity of long-term development.

III  Practice and experience of the Bank of Inner Mongolia in providing support to poverty-stricken areas

The Bank of Inner Mongolia, formerly known as Hohhot City Commercial Bank, is the only regional shareholding commercial bank in the Inner Mongolia Autonomous Region. During the past decade of its development, the Bank of Inner Mongolia unswervingly presses ahead with the reform, keeps optimizing the operational mode, improves operation efficiency, initiatively behaves in a socially responsible manner, and actively participates in and supports poverty reduction and development in Inner Mongolia.

First, we offer small-amount credit loans so as to help laid-off and jobless people to find reemployment. The Bank of Inner Mongolia attaches great importance to vulnerable groups and actively provides laid-off and unemployed workers with small-amount credit loans, making it the first financial institution to offer secured loans to laid-off and unemployed workers in Inner Mongolia. Through flat management, considerate service, initiative marketing, simple procedures, and the establishment of the integrity community platform and the training platform for starting the new business, the bank timely meets the financing requirements of laid-off and unemployed workers. To this date, the Bank of Inner Mongolia has helped thousands of laid-off and unemployed workers find new jobs.

Second, we actively support local economic development and improve development conditions and environments in poverty-stricken areas. Over the past decade, the Bank of Inner Mongolia has totally invested billions of RMB in local economic restructuring, industrial upgrading, urbanization, and financing for local vulnerable industries. The Bank of Inner Mongolia actively participates in the reform and construction of water supply, heat supply and power supply systems. In addition, the bank actively supports municipal construction projects and the projects involving public interests such as river reconstruction, urban bridge construction, pipeline and network reform, ring road construction, expressway construction, rural road construction, sand prevention and landscaping, and taxi upgrading and investment.

Third, we offer loans to enterprises to support their development. As enterprises play an important role in economic development in an area, their rapid, sound development will help substantially increase financial revenue, expand employment, stimulate local economic growth, and promote poverty reduction. Therefore, the Bank of Inner Mongolia actively provides policy support and financial support to local enterprises. In light of the poor financing capacity and strong capital demands of local small and medium-sized enterprises, the Bank of Inner Mongolia introduces a series of products and service in an innovative manner, meeting the financing demand of small and medium-sized enterprises in different areas, of different types and at different stages. Through mechanism establishment, the bank ensures increased efficiency in financing of small and medium-sized enterprises and provides support to a great number of small and medium-sized enterprises featuring high scientific and technological content, good economic benefits, promising products, and tremendous potential for development. Presently, the Bank of Inner Mongolia is playing a leading role in financing for small and medium-sized enterprises, creating the brand of “a bank providing service to small and medium-sized enterprises”. For years, with the support of the Bank of Inner Mongolia, some local enterprises are growing in a sound and sustainable manner, and some of them have become leading enterprises and major tax-payers.

Fourth, we donate money and supplies in support of local social development. Over the past decade, the Bank of Inner Mongolia actively participates in and supports poverty reduction programs through donating money for education, funds and articles, showing our love to the society. By far, the bank has donated more than 10 million yuan to support education, disaster relief, the “SARS” disaster relief in 2003, and the Wenchuan earthquake relief in 2008.

The earth is our shared home, while poverty is our common enemy. Therefore, it is our shared responsibility to reduce poverty, while development is our common goal. In consideration of its social role and service functions, the bank will play an important role in poverty reduction and economic development. By attending this “Poverty Reduction & Development” summit forum, we broaden our horizons and learn valuable experience in poverty reduction and development. In our future development, we will continue to be socially responsible, give full play to our advantages, work hard to do a good job, and work closely with relevant parties so as to score more progress in poverty reduction and development and make still greater contributions to poverty reduction and development in the Inner Mongolia Autonomous Region.  

Thank you very much!