(LI SHIGONG)

Recently, the China Securities Regulatory Commission conducted a survey on rural residents' demand for investment through securities companies. Items covered by the survey are the depth of the farmers' desire for the investments, areas where they are much wanted, and the services dealers are able to offer to rural investors. Dealers are very optimistic about this idea.

This news caused a great stir. But officials with the commission immediately claimed the survey was just part of a study on rural finance and they were not formalizing policies to develop securities brokerage services in rural areas. But debate on the feasibility of the idea on the Internet is heated.

A survey on news portal Sina.com on the day the news broke showed 70.9 percent of 23,551 respondents opposed this idea, while 23.3 percent were in favor and 5.9 percent were undecided.

Most people believe the time is not yet right for developing securities brokerage services in rural areas. They believe the stock market is highly risky and farmers, who commonly have little appreciation of risk, would probably suffer from huge losses. Meanwhile others say the move, if launched, will help in offering necessary financial services. If securities regulators took the trouble to develop farmers' awareness of investment and risk avoidance, it would be a good chance to cut back huge capital shortages in rural areas and push forward rural development.

The Green Paper on China's Rural Economy, issued by the Chinese Academy of Social Sciences, estimates in 2010 Chinese farmers' annual per-capita net income will exceed 5,500 yuan ($805). Today, the price of the cheapest stock on the Chinese market is 3.59 yuan ($0.56) apiece. Since the required lowest volume of stock trading is 100 shares per transaction, the threshold for investment in China's stock market is 359 yuan ($56).

Satisfying farmers

Chen Ningyuan (Oriental Morning Post): It's no exaggeration to say China has the largest number of stock investors and the nation is developing unprecedentedly strong awareness of investment and wealth management.

By the end of 2009, the number of investor accounts in China's Shanghai and Shenzhen stock exchanges had topped 140 million. We don't know whether those who opened accounts were urban or rural residents. All the same, most outlets of securities companies are in urban areas. Shanghai, for example, has nearly 500 securities brokerage outlets to serve its 20 million residents. In central and western regions, there may be not even one in the whole of a county.

China's stock market is only 20 years old, but the market value has increased 120 times. By the end of 2009, China had become the world's second largest stock market in terms of market value. The amount of funds raised through initial public offerings on the Chinese market ranked the world's first as early as 2006 and remains so.

No one can now afford to ignore China's stock market. In the past, investors all focused on the U.S. stock market, but now the Chinese market has attracted a lot of attention.

Although the renminbi (yuan) is not convertible on capital accounts, it has not prevented China's stock market from becoming an investment heaven worldwide following the recent global financial crisis. Foreigners, either from urban or rural areas, can invest in China's stock market through the qualified foreign institutional investor program. Why can't rural Chinese residents do the same thing?

As China's stock market has never put investors' interests first, it falls short of a developed system designed to protect investors' rights and interests, particularly small investors. As a result, insider trading is rampant. But this is not a reason to deny rural residents' access to securities investment.

Rural residents are not born to be poor investors. Their contribution to China's progress is no less than urban residents'. While urban residents can enjoy all kinds of convenience in the stock market, they also need them.

Rural residents are not incapable of making investments, but there are not enough channels for them to do so. This is the biggest bottleneck facing the development of securities brokerage services in China's rural areas and also the biggest block to any rural-friendly projects developing.

Chen Lanhua (Hainan Daily): Since the mid-1990s, state-owned commercial banks have begun to adopt strategies that center on cities and big enterprises. County-level financial institutions all cut their branches and credit loan services went to the big cities. As a result, rural financial services gradually withered.

When farmers have limited access to regular financial support for production and living, illegal financial operations find their way to rural areas. Securities investment is risky for farmers, but at least it will not drive them bankrupt and is better than farmers becoming involved in illegal financial operations.

The development of securities brokerage services in rural areas is also helpful to stimulate farmers' passion for financial investment. Later they will develop demand for other financial products.

Yu Fenghui (Jiangnan Times): People are opposed to the idea of "developing securities brokerage services in rural areas" mainly because they do not believe in China's stock market that operates under loose regulation. Urban residents have suffered too much from the problematic market in the past two decades and they don't want to see their rural compatriots repeating the painful experience.