Economic growth in recent decades has made China a world economic powerhouse. Despite falling poverty rates, still about 10% of the population of 1.3 billion, or more than 100 million people live below the poverty line. There is now a growing demand for microfinance intervention following the Grameen methodology, to alleviate poverty in China.

In October, 2006, Professor Muhammad during one of his first overseas trips following the announcement of the Nobel Peace Prize award, visited China to preside over Grameen International Microcredit Conference. During his visit, Professor Yunus met many officials and dignitaries, including Ms. Wu Xiaoling, Deputy Governor, People's Bank of China and Mr. Liu Mingkang, Chairman of China Banking Regulatory Commission. Following his visit Grameen Trust (GT) initiated a process to set up a Grameen Microcredit Company in China to facilitate expansion of microcredit programs in the country.

Grameen Trust began supporting microfinance initiatives for poverty alleviation in China back in 1993, first in Yixian County through the Funding the Poor Cooperative (FPC). So far GT has provided US$1.63 million to 17 partners, of which 15 are currently active in ten provinces. The provinces where GT partner MFIs currently are working include: Gansu, Guizhou, Hebei, Henan, Jiangxi, Inner Mongolia, Liaoning, Shaanxi, Sichuan, and Yunan.

Initially GT hoped to set up the Grameen Microcredit Company in Sichuan Province of China. Ms. Jannat-e-Quanine, Deputy General Manager, Grameen Bank was sent as a resource person in February 2007, to assess the feasibility and recommend measures for setting up a microcredit company (MCC) in Sichuan Province.

While GT was moving forward with its initiative in Sichuan Province, during Professor Yunus' visit to China in April 2007, Grameen Trust was invited to set up a microcredit program in Inner Mongolia Province.

Currently GT is moving forward with two Grameen Microcredit Companies in China, one each in Sichuan Province and Inner Mongolia. China International Center for Economic and Technical Exchanges (CICETE) is partnering with GT for the MCC initiative in Sichuan Province. FPC is partnering with GT for the MCC initiative in Inner Mongolia Province. The Governor of Wenchuan County in Sichuan has set up the Microcredit Coordination Group (MCG) and has formally invited GT to set up the first office of Grameen Microcredit Company in the county.

China presents a unique opportunity for effective microcredit intervention to coincide with various government programs for poverty alleviation. GT has experience with MFIs around the world, including 15 partners in ten Provinces of China, and operating seven directly implemented projects for poverty alleviation in challenging situations in Myanmar, Kosovo, Turkey, Zambia, Costa Rica, Guatemala and Indonesia. The Trust believes that it's initiative for setting up a microfinance company for poverty alleviation in Sichuan and Inner Mongolia Province, will be a cost effective way to reduce poverty in China.

Report by Tamim Islam, Grameen Trust