The Linxia Hui autonomous prefecture in Northwest China's Gansu province has come out with a innovative financing program to help the rural people escape poverty faster, according a top official of the prefecture on Sunday.

Zhou Qiang, Party Secretary of the Linxia Hui autonomous prefecture in Northwest China's Gansu province, elaborates on the development situation of the prefecture on August 4. [Yan Weijue/chinadaily.com.cn]

The mechanism, titled Mutual Aid Union for Industrial Development in Villages and launched in April, is aimed at combining different sources of government, enterprises and union members to establish a more convenient and profitable platform of loans for its members. introduced Zhou Qiang, Party Secretary of the prefecture, introduced the program at a symposium.

"The idea of the Mutual Aid Union was independently created by Linxia itself to help villagers who intend to try starting up new agricultural projects but find it hard to ask for loans from the banks," he said, adding that the banks, including the Rural Credit Cooperative, have been over-commercialized and are more inclined to offer loans only to enterprises rather than individuals extremely impecunious individuals.

As a result, the provincial authorities worked out the new financing mechanism to set up a large cash pool in which the prefecture government puts in 500 million yuan and allocated around 500,000 yuan to each of its 1,075 villages on average. At the same time, the government strives to pair local enterprises with the villages, with the former injecting a fund ranging from 50,000 to 490,000 yuan in matching funds. A villagers can only apply for a loan after he becomes a union member and throws in 1,000 yuan into the pool.

The Gansu Bank and the National Development Bank have injected 5 million yuan each for the program, which relieved the financing pressure to great extent, said Zhou.

Compared with the banks, the Mutual Aid Union program, which is under the supervision of a special committee locally, charges a lower monthly loan rate of 0.5%, and the application period is cut to two or three days. In additions, union members can share out certain bonuses from the profits of other members and enterprises, according to Zhou.

"At present, more than 500 villages in the prefecture are covered by the financing program", said Zhou, adding that all of the 1,075 villagers are expected to become its beneficiaries at the end of this year.

The Linxia prefecture, where 60 percent of its population of 2 million are minorities nationalities, is among the most poverty stricken areas in Gansu province. Statistics shows that as many as 900.000 people were below the poverty line in 2012.

But it has vowed to shake off the plight by 2017 across the prefecture through a variety of measures including the Mutual Aid Union program. And it has achieved initial success.

"In the first half of this year the GDP of the prefecture amounted to 7.04 billion yuan, with a year-on-year increase of 15.3 percent, which is the second-fastest growth in the province," said Zhou.