1. Policy background and main content The No. l Central Document in 2014 explicitly listed the following requirements for the rural financial reform:

(1) Financial institutions should enhance services for agriculture, rural areas and farmers. Large and medium-scale commercial banks should have county branches, and their service coverage should be expanded in townships and villages. Special institutions and management systems should be created to fit rural conditions. Services for farmers and small business in rural areas should be enhanced. Loan-to-deposit ratio should be increased, and the credit availability should be included in policy impact evaluation. The Agricultural Bank of China should steadily expand the coverage of the reform pilot program for rural financial service departments; the Postal Savings Bank of China should be encouraged to expand rural financial services; the Agricultural Development Bank of China should be supported to provide medium and long-term credit services, and a differential supervision system should be established. The rural credit cooperatives should enhance their services. The development of country banks should be facilitated, with the goal of covering all counties. The medium and small-scale banks and other financial institutions supported by social funding should be supported. Microcredit companies' financing channel and management system should be improved, and they should be included in the credit information system, in order to enhance their services for agriculture and small business. Qualified agricultural companies should be supported to list on the Main Board or the Growth Enterprise Market, and listed agricultural companies should be stimulated to improve their management systems. Other agricultural companies should be guided to list on the National Equities Exchange and Quotations. Securities and futures institutions should be encouraged to develop products fit for rural areas.

(2) Efforts should be taken to develop new types of rural cooperative financial institutions. Based on the construction of farmers' cooperatives and supply and marketing cooperatives, various types of rural financial institutions should be developed. Rural mutual fund organizations should be developed on the premises of adhering to the membership system, not accepting outside funding and not paying fixed returns. Rural financial management systems should be improved and the supervision duties of local governments should be clarified. Local governments should establish risk compensation funds, and release management regulations on rural cooperative financial institutions.

(3) Efforts should be taken to enhance the support for agricultural insurance. The central government and provincial governments should increase the proportion of premium subsidy for major crops, while the prefectural premium subsidy should be reduced or cancelled. The insurance coverage and guarantee level for rice, wheat and corn should be enhanced. Insurance companies should be encouraged to develop insurances for local specialties. The insurance coverage for livestock and forestry should be expanded. Various forms of cooperative insurances should be encouraged. The reserve fund system for disaster prevention should be better managed, and the construction of risk dispersed system should be accelerated. Services of loan guarantee insurance and credit insurance for agriculture should be explored.

2. Policy implementation and impact evaluation By the end of 2014, the balance of agriculture-related loans in domestic and foreign currency of all domestic financial institutions was 23.6trillion yuan, increasing by 3 trillion yuan, up 13 percent from the previous year. Investment in agriculture-related loans and credit continued to increase.

(1) Several measures were taken to enhance the support for rural finance.

The first measure was enacting credit policies. Firstly, reserve requirement ratios (RRR) should be differentiated based on regional conditions. Since 2014, the People's Bank of China has rolled out two times of targeted RRR cut. County rural commercial banks' RRR was cut by 2 percentage points, and rural cooperative banks' was cut by 0.5 percentage point. For the commercial banks that fulfilled management requirements and the required amount of credit for agriculture and small business, their RRR was reduced by 0.5 percentage point. Secondly, the re-lending for rural financial institutions was enhanced. Credit policies were revised to cut re-lending interest rates of agricultural and small business loans by 0.25 percentage point and 0.4 percentage point respectively. At the end of December 2014, the balance of nationwide agricultural supporting relending was 215.4 billion yuan, with an increase of 47 billion yuan compared to the same period in previous year, and a total of 310.2 billion yuan was re-lent in 2014. Thirdly, rediscount was used to improve the credit system. At the end of December 2014, the balance of rediscount was 137.2 billion yuan, with an increase of 23.5 billion yuan compared to the same period in previous year, and a total of 385.8 billion yuan was re-lent in 2014.

The second measure was enacting financial and tax policies. Firstly, the funding awards were increased for agricultural loans lent by county financial institutions. By the end of 2014，the central government had awarded 11.534 billion yuan to 17,400 county financial institutions and microcredit companies since the policy was established, among which 2,603 million yuan was awarded in 2014, up 24.5 percent year-on-year. Secondly, the targeted subsidy for rural financial institutions was increased. By the end of 2014, the central government had subsidized 5,062 rural financial institutions with 10.35 billion yuan since the policy was established, among which 2.619 billion was subsidized in 2014. Thirdly, tax preference policy for rural financial institutions was carried on. In December 2014, the State Council decided to extend the expiration date of two overdue tax preference policies to Dec.31, 2016: The business tax on interest income of rural financial loans should be exempt, and 10 percent of the income tax should be exempted; 10 percent of the premium income tax on insurances for plant industry and breeding industry should be exempted, and the exemption rate of county financial institutions' business tax is 3 percent. The amount limit of rural loans qualified for tax preference was raised from 50 000 yuan to 100 000. Fourthly, the subsidies for agricultural insurances were increased. The central government subsidized 30 percent to 50 percent of premium, provincial governments subsidized 25 percent to 30 percent, and municipal and county governments subsidized 10 percent to 15 percent, aggregating to about 75 percent of the premium in total. Premium of characteristic advantage agricultural products was mainly subsidized by local governments. By the end of 2014, the central government had allocated 63.27 billion yuan of premium subsidies since the establishment of the policy. Some 14.45 billion yuan was subsidized in 2014, which was six times of the amount in 2007, with an average annual growth rate of 31 percent.

The third measure was improving the positive motivational system. Firstly, the People's Bank of China released a document on the orientation evaluation of policies on agricultural and small business loans, in order to improve evaluation standards, enhance the use of evaluation results and combine the results with other aspects, such as re-lending, rediscount and quota adjustment. Secondly, the deposit increase of county financial institutions was included in the evaluation of loan conditions. The institutions that reached the requirements of deposit increase were qualified for lower deposit reserve ratio and lower re-lending interest. The dynamic supervision of rural credit cooperatives' reform was enhanced to improve the motivational effects of re-lending and rediscount, and improve their financial services.

(2) Several measures were taken to deepen the reform of rural financial institutions.

The first measure was advancing the reform of rural finance division at the Agricultural Bank of China. By the end of November 2013, the pilot reform area was expanded from 12 provinces (autonomous regions, or municipalities) to 19. So far, the pilot program has covered 72 percent of the Agricultural Bank's county branches, 79 percent of their staff, 83 percent of their deposits and 85 percent of their loans. As of end of December in 2014, the loan balance of 19 pilot areas' county divisions was 2.26 trillion yuan, increasing 234 billion yuan from the beginning of the year, and up 11.55 percent, which was 0.96 percentage point higher than the branches' increase.

The second measure was advancing the reform of the Agricultural Development Bank of China. The 63rd executive meeting of the State Council in 2014 approved the reform plan, in order to enhance the leading role of the Agricultural Bank of China in the rural financial system.

The third measure was developing new types of rural financial institutions. By the end of 2014, the construction of 1,296 new-type rural financial institutions was initiated, among which there were 1,233 rural banks (1,153 was open, and 80 in construction), 14 loan companies, 49 mutual fund cooperatives; which attracted 89.3 billion yuan of funding, 582.6 billion yuan of deposit balance, and 489.6 billion yuan of loan balance, among which 241.2 billion was for small business and 213.7 billion was for farm households, accounting for 92.9 percent of the total loan balance. Meanwhile, the business scale of microcredit companies was expanded. By the end of 2014，8,791 microcredit companies were included in the statistic system of the People' s Bank of China, with 110 000 employees, and loan balance of 942 billion yuan, up 15 percent year-on-year.

The fourth measure was developing new types of rural financial cooperatives. So far, there are mainly four types of institutions that conduct credit cooperation. The first type is mutual fund cooperatives approved by the China Banking Regulatory Commission. By the end of March 2014, 49 rural mutual fund cooperatives were built, with 36,000 members, 1.64 billion yuan of deposit balance and 1.31 billion yuan of loan balance. The second type is poverty-area mutual fund cooperative approved by the State Council Leading Group Office of Poverty Alleviation and Development. By the end of March 2014, 20,700 poverty-area mutual fund cooperative was built, with 1.91 million members, 4.96 billion yuan of deposit balance and 1.81 billion yuan of loan balance. The third type is farmers' specialized cooperatives that carry out credit cooperation. By the end of March 2014, 2,159 specialized cooperatives carried out credit cooperation, with 199,000 participating members, 3.69 billion yuan of deposits and 4.24 billion yuan of loans. The fourth type is the interior funding platform of supply and marketing cooperatives. By the end of March 2014, 314 supply and marketing cooperatives carried out mutual funding, with 151,000 participating members, 2.67 billion yuan of deposit balance and 1.92 billion yuan of loans balance.

(3) Several measures were taken to innovate rural financial products.

The first measure was enhancing supports for new types of agricultural business entities. In 2014, the People's Bank of China released a document on providing financial services for family farms and other new types of agricultural business entities, which stressed the credit supports for production material purchase, the circulation of land contracted and management rights, the construction of agricultural infrastructure. Efforts were taken to build the "main bank system." The Agricultural Development Bank of China, the Agricultural Bank of China, the Postal Savings Bank of China, rural credit cooperatives and other agriculture-related financial institutions were required to support at least one new-type agricultural business entity in each major agricultural county.

The second measure was innovating mortgaging methods. The mortgage registration system of woodland ownership was improved and the amount of mortgages was increased. New mortgage methods were promoted, such as mortgaging agricultural facilities or means of transportation. The pilot program on contracted land management right mortgages and house property mortgages. The pilot program on loans for large-scale crop production business owners was initiated.

(4) Several measures were taken to develop the agricultural insurance market.

The first measure was expanding the insurance coverage. In 2014, the agricultural insurance premium income was 32.57 billion yuan, up 6.2 percent year-on-year; the amount for risk prevention was 1.66 trillion yuan, up 19.7 percent year-on-year; there were 247 million insured farm households, up 15.71 percent year-on-year. Agricultural insurance has been available nationwide. Some 101 million hectares of land was insured, accounting for 61.6 percent of all domestic farmlands. The insured rates of farmlands for the three major grain, rice, com and wheat were 68.7 percent, 69.5 percent and 49.3 percent respectively.

The second measure was improving services. Some 23,000 agricultural insurance service branches were built in townships, 280,000 branches were built in villages, covering 48 percent of all villages, and with nearly 400,000 employees.

The third measure was expanding the coverage of target price insurances. Target price pilot programs on rice, corn and wheat were initiated in Heilongjiang, Hebei, Hunan and Henan; the coverage of the pilot program on pig target price was expanded from Beijing to other provinces such as Sichuan, Chongqing city and Hunan; the coverage of the pilot program on vegetables was expanded from Shanghai to other provinces such as Jiangsu, Guangdong, Shandong and Ningxia Autonomous Region. Innovative products such as weather index insurance and hydrologic index insurance were created. Microloan guarantee insurances were developing fast.

(5) Agricultural direct funding was advanced steadily. By the end of 2014, 218 agricultural companies issued 782 funding instruments with an amount of 723.34 billion yuan, and the period-end balance was 295.36 billion yuan. During 2013 and 2014, three agricultural companies held their initial public offering, raising 1.73 billion yuan; 20 listed agricultural companies refinanced 25.06 billion yuan. By the end of 2014, 66 agricultural public companies had been listed on the national stock exchange, with an increase of 55 from 2013. Five companies issued a total of 45.569 million shares, raising about 125.11 million yuan. In 2014, three agricultural companies issued 1.8 billion yuan of corporate bonds; 28 agricultural companies issued 5.33 billion yuan of private placement bonds; a microloan support program was established, raising 500 million yuan. In 2014, late indica rice and cornstarch were added to the list of the futures market. By the end of the third quarter of 2014, the investment balance of private equity funds in agriculture was 17.2 billion yuan.