China's debt-wrecked rural financial system has gained strengthen after reform and tightened supervision, the latest government statistics show.

Rural financial institutions, comprised mostly of 30,000 rural credit cooperatives (RCCs), reported a 125.9 billion yuan (14.8 billion U.S. dollars) of reduction in outstanding non-performing loans at the end of 2005, according to the China Banking Regulatory Commission (CBRC).

The latest round of RCC reform was initiated at the end of 2002, when provincial governments began to bear the responsibilities of administering the RCCs to head off cursory lending.

RCCs were sponsored by grassroots government departments and enterprises and individuals decades ago as the bedrock of the rural financial system.

A dozen rural commercial banks and 60 rural cooperative banks have, so far, become operational after RCC's merging with another nine cooperative banks.

Rural banking assets came to 3.72 trillion yuan at the end of 2005, surging 57.9 percent from three years ago, while total debts soared 64.2 percent to 1.28 trillion yuan, the CBRC said in a report.

Streamlined operation at RCCs tends to benefit rural development, especially when the Chinese government has launched an aggressive campaign to build new socialist countryside, analysts say.

In the move, China is focusing on more than 800 million farmers following a quarter-century economic boom in urban, typically coastal areas as a result of reform and opening-up.

RCCs reported an 80.5 percent surge in their outstanding loans for agricultural development at the end of 2005 over that at the end of 2002, reaching more than 1 trillion yuan by the end of last year.

Source: Xinhua