The predicament currently faced by rural finance in China is mainly related to the inadequate supply of financial services by the two-tier system of official financial institutions. Constraints on the demand side are of secondary importance. However, it is necessary to proceed from the two sides, supply and demand, if the complex financial constraints are to be removed. At present, the limitations on rural finance constitute one of the bottlenecks in the "Three Nong" (agriculture, countryside and farmers) problem. How such constraints came into being and how to eliminate their impeding effect on agriculture and the rural economy have become a matter of vast interest in the decision-making and academic circles. With this in mind, this paper starts from the present situation, analyses the reasons why rural finance has currently fallen into difficulties and puts forward proposals for reform.
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