In order to promote the development of rural inclusive finance，it is necessary to carry out reform and innovation of both the macro-system and financial institutions on the supply side. However，the supply-side reform must be based on the accurate knowledge of the demand characteristics. The household’s balance sheet can reflect the financial status of the household，such as asset stock and its composition，the debt stock and its composition，asset liquidity and solvency，savings rate and investment capacity，etc.，and help to more accurately understand the basic rules and operating mechanism of rural financial market，therefore provides the inspiration for the path and direction of the construction of rural inclusive financial system.

Based on the data of farmer households surveyed by the National Rural Fixed Observation Point Survey System （hereinafter referred to as “the rural fixed observation point”） from 2009 to 2013，this report firstly screened out the eligible samples. Then，all the eligible samples were sorted according to the annual average households’ net income from low to high，and were divided into five groups according to the sample size. Each income group was further divided into two groups of borrowers and non- borrowers based on the sample’s borrowing behavior. We established the household balance sheet of samples in each income group as well as that of the borrower and the non-borrower，and analyzed the households’ financial information such as assets structure，asset-liability ratio，income repayment ratio，saving rate，credit value，impact on the balance sheet and the source，cost and use of the credit. The following conclusions can be drawn from the above analysis：

Firstly，the reason why the farmers borrow money is their family financial resources are insufficient.The proportions of financial assets of borrowers are obviously lower and fluctuated greatly among different years，so does the savings rate.

Secondly，with the rapid growth of rural financial markets，the number of borrowers decreased，while the average amount of credit significantly increased. The family financial assets-liability ratio of borrowers is very high，but the income debt service rate is very low，which shows that borrowers’ household debt level and liquidity risk are low. It is difficult to accumulate family wealth for them. Farmers’ credit services availability and their income levels are positively related.

Thirdly，the foundational obstacle for financial institutions to support rural credit service is the “invalidity of resources” farmers held. Farmland and farmhouse can’t be used as financing guarantee because of the rural collective property right system. This made the low-income farmers be harder to get credit. Offering farmers the right to trade farmland and farmhouse can greatly increase their family assets，in order to reducing the credit risk and increasing the availability of credit for them. In particular，it can significantly narrow the gap of the total assets per household among the income groups，thereby significantly reducing the family’s asset-liability ratio of the low-income households，and improving its credit conditions.

Fourthly，the foundational contradiction of the rural credit market is the “mismatch”，that is，the outflow of rural capital is serious. The farmers have a lot of deposits in financial institution，but can only get limited credit. Especially，low-income farmers get very little banking services. Rural private lending is the main source of farmer credit，means its existence is reasonable and necessary.

Fifthly，the opportunities for farmers from different income groups to obtain formal financial services are unequal. More than two-thirds of the bank’s credit resources are allocated to the farmers from top-income group. Although RCCs have a relatively balanced distribution of credit resources，the farmers from top-income group still received almost half of entire credit. It is noteworthy that the farmers from second low-income group get the least loan from the formal financial institutions instead of those from lowest income group，who we think faced to the largest exclusion of formal finance. There are both complementation and substitution between formal finance and private lending. The more credit households can get from formal financial institutions，the less they rely on private lending. The phenomenon that farmers from lowest income group get more formal financial services than those from lower income group may be related to the government’s financial poverty alleviation policy，which included not only interest subsidized microfinance for poverty alleviation，but also formal financial credit with diverse guarantee mechanisms for poor households，and mutual-aid-funds specifically for poverty alleviation.

Sixthly，the household’s credit is also a kind of assets，and can be taken as intangible assets in the family’s balance sheet. It can increase the total assets value，improve the asset structure and reduce asset-liability ratio，and is regarded as an important foundation for formal financial institutions and private lenders to provide credit. Therefore，the rural credit evaluation system has the function of “resource creation”，which is the basic means for the rural financial institutions to carry out the business. It can effectively alleviate the dilemma of the rural households“inefficiency of resources” and improve their availability of credit services.

Seventhly，the basic shortcoming of the rural inclusive financial system is the lack of financial service system，service mechanism and product design which can overcome the above basic obstacles and contradictions and meet the real demand of rural credit，while both lack of farmers’ cooperative financial organizations，and lack of the service mechanism and product design that can meet farms’ demand （especially for low-income farmers）.

Eighthly，interest rates in China’s rural financial market were too low because of long-term regulation，which restrained the willingness of financial institutions to carry out credit services. Therefore，rural borrowers were harder to get credit，or suffering additional charging. Several cases in this report show that the cost of getting credit from formal financial institutions has not been significantly reduced from 2007，even rising somewhat after the marketization of interest rates in 2013. The rising interest rate has a positive incentive for developing rural finance service and will help reduce the credit costs.

Ninthly，deposit is the basic means of wealth management for farmers. The proportion of external investment of household is very low and the proportion of deposits is very high. On the one hand，it may indicate that farmers’ investment capacity is still very weak；On the other hand，it also indicates that farmers’ investment channels are little. An important reason for the rural fund-raising fraud in recent years is lack of financial investment channels and knowledge for rich farmers.

There are several implications on the method and objective of rural inclusive finance can be drawn from the above conclusions：

Firstly，rural area development is the key and aporia of building a moderately prosperous society. Although the number of households with credit demand may reduce，the average amount of credit per household needed is keeping increasing. It is necessary to promote the development of rural inclusive finance to meet the expanding credit demand and new financial services demand in rural area.

Secondly，inclusive finance reflects the spirit of “open，inclusive，sharing development”，and it focus on financial services for disadvantaged areas and vulnerable groups，which is drastic of social cognition of profit maximization principal. Therefore，the principal of pushing on inclusive finance should include the combination of market leading and government guiding，as well as the balance of business profit and social responsibility. The government should enact fiscal，monetary and supervisory policies to support and guide the inclusive finance development，while financial institutions and the whole society should change their understanding，emphasizing on their social responsibility.

Thirdly，the basic thinking of promoting rural inclusive finance should be to overcome the “invalidity of household’s resource” and “mismatch of rural credit resources”. According to the basic characteristics of farmers’ credit demand，we should promote the service mechanism system construction and financial service and products innovation and reform from the supply side.

Fourthly，from the macro-level of the supply side，the government should establish the financial policy system based on the characteristics of the rural financial market，improving the rural financial environment and the rural financial service system，supporting financial institutions to carry out rural financial activities，reducing rural capital outflows，and even leading the urban capital to flow back. To keep pushing on the reform of the rural property mortgage credit pilot；explore the chattel mortgage policy system. Building trustworthy environment to enhance the confidence of financial institutions for developing rural financial business；encouraging and supporting the rural financial institutions to construct credit evaluation system and offer credit loans；confine the business scope of the county financial institution within the county level or below，encouraging the well-operating financial institutions to do business over the counties；continue to improve the existing agriculture-supporting-relending and small-scale-supporting-relending policies，design good poverty-alleviation-relending policy system，and provide low-cost funding resources for rural and small and medium financial institutions to provide agricultural credit services；establish rural inclusive financial development foundation to guide and support financial institutions and poverty alleviation microfinance institutions to support services in poor areas；support the rural internet finance and supply-chain finance development，lead the capital flow to rural areas；improve the rural financial institutional system，support and standardized the development of farm cooperative financial organization within rural community，passing laws for rural cooperative finance based on the relative regulations and lows；regulate and protect the private lending. To strengthen the construction of rural financial infrastructures，especially payment infrastructure in poor areas in rural areas，promoting the settlement accounts，payment instruments and payment settlement networks；expand the coverage of convenient withdraw for farmers in the remote villages；encourage to explore the mobile payment，internet payment and other emerging electronic payment methods to develop payment services market in rural area. The development and application of information technology have provided potential solutions to overcome the difficulties of traditional rural financial service，and it will become the important leading force of rural financial development in the future. According to the advanced principles confirmed in the G20 Hangzhou Summit，the government should improve the rural digital financial services infrastructure construction to promote inclusive financial development.

Fifthly，from the financial services and product system level in the supply side，the rural financial institution should break through the restriction of traditional collateral，and build reasonable rural credit evaluation system，especially in areas besides the “two rights mortgage credit” pilot，to sustain the rural inclusive financial service system. They should also innovative financial services mechanisms and product system based on the characteristics of agricultural production，farmers’ living demand，local industry and relative policies and resources. It is necessary to actively develop digital financial technology，improve infrastructure，service mechanisms and products，deepening the rural inclusive financing services.

Sixthly，special attention should be paid to reduce inequality in access to formal financial services among households from different income groups. The current precise anti-poverty policy requires financial institutions to provide credit to poor households recorded in the poverty files. This policy may exacerbate inequality in access to formal financial services among households in different income groups，especially for the farmers from sub-low income groups who were not recorded in poverty file. It is not consistent with the target of rural inclusive finance. Therefore，both the macro-level system and the financial institution service mechanism should pay special attention to eliminate such discrimination.

Seventhly，to encourage financial institutions to actively and orderly explore new mode of rural investment and financial products and services，broadening the channels for investment and financial management of farmers，expanding the income sources of rural financial institutions. To offer financial education for farmers to protect their rights of financial consumption，cracking down the illegal fund-raising.

In order to promote the development of rural inclusive finance，it is necessary to carry out reform and innovation of both the macro-system and financial institutions on the supply side. However，the supply-side reform must be based on the accurate knowledge of the demand characteristics. The household’s balance sheet can reflect the financial status of the household，such as asset stock and its composition，the debt stock and its composition，asset liquidity and solvency，savings rate and investment capacity，etc.，and help to more accurately understand the basic rules and operating mechanism of rural financial market，therefore provides the inspiration for the path and direction of the construction of rural inclusive financial system. Based on the data of farmer households surveyed by the National Rural Fixed Observation Point Survey System （hereinafter referred to as “the rural fixed observation point”） from 2009 to 2013，this report firstly screened out the eligible samples. Then，all the eligible samples were sorted according to the annual average households’ net income from low to high，and were divided into five groups according to the sample size. Each income group was further divided into two groups of borrowers and non- borrowers based on the sample’s borrowing behavior. We established the household balance sheet of samples in each income group as well as that of the borrower and the non-borrower，and analyzed the households’ financial information such as assets structure，asset-liability ratio，income repayment ratio，saving rate，credit value，impact on the balance sheet and the source，cost and use of the credit. The following conclusions can be drawn from the above analysis：Firstly，the reason why the farmers borrow money is their family financial resources are insufficient. The proportions of financial assets of borrowers are obviously lower and fluctuated greatly among different years，so does the savings rate. Secondly，with the rapid growth of rural financial markets，the number of borrowers decreased，while the average amount of credit significantly increased. The family financial assets-liability ratio of borrowers is very high，but the income debt service rate is very low，which shows that borrowers’ household debt level and liquidity risk are low. It is difficult to accumulate family wealth for them. Farmers’ credit services availability and their income levels are positively related. Thirdly，the foundational obstacle for financial institutions to support rural credit service is the “invalidity of resources” farmers held. Farmland and farmhouse can’t be used as financing guarantee because of the rural collective property right system. This made the low-income farmers be harder to get credit. Offering farmers the right to trade farmland and farmhouse can greatly increase their family assets，in order to reducing the credit risk and increasing the availability of credit for them. In particular，it can significantly narrow the gap of the total assets per household among the income groups，thereby significantly reducing the family’s asset-liability ratio of the low-income households，and improving its credit conditions. Fourthly，the foundational contradiction of the rural credit market is the “mismatch”，that is，the outflow of rural capital is serious. The farmers have a lot of deposits in financial institution，but can only get limited credit. Especially，low-income farmers get very little banking services. Rural private lending is the main source of farmer credit，means its existence is reasonable and necessary. Fifthly，the opportunities for farmers from different income groups to obtain formal financial services are unequal. More than two-thirds of the bank’s credit resources are allocated to the farmers from top-income group. Although RCCs have a relatively balanced distribution of credit resources，the farmers from top-income group still received almost half of entire credit. It is noteworthy that the farmers from second low-income group get the least loan from the formal financial institutions instead of those from lowest income group，who we think faced to the largest exclusion of formal finance. There are both complementation and substitution between formal finance and private lending. The more credit households can get from formal financial institutions，the less they rely on private lending. The phenomenon that farmers from lowest income group get more formal financial services than those from lower income group may be related to the government’s financial poverty alleviation policy ，which included not only interest subsidized microfinance for poverty alleviation，but also formal financial credit with diverse guarantee mechanisms for poor households，and mutual-aid-funds specifically for poverty alleviation. Sixthly，the household’s credit is also a kind of assets，and can be taken as intangible assets in the family’s balance sheet. It can increase the total assets value，improve the asset structure and reduce asset-liability ratio，and is regarded as an important foundation for formal financial institutions and private lenders to provide credit. Therefore，the rural credit evaluation system has the function of “resource creation”，which is the basic means for the rural financial institutions to carry out the business. It can effectively alleviate the dilemma of the rural households“inefficiency of resources” and improve their availability of credit services. Seventhly，the basic shortcoming of the rural inclusive financial system is the lack of financial service system，service mechanism and product design which can overcome the above basic obstacles and contradictions and meet the real demand of rural credit，while both lack of farmers’ cooperative financial organizations，and lack of the service mechanism and product design that can meet farms’ demand （especially for low-income farmers）. Eighthly，interest rates in China’s rural financial market were too low because of long-term regulation，which restrained the willingness of financial institutions to carry out credit services . Therefore，rural borrowers were harder to get credit，or suffering additional charging. Several cases in this report show that the cost of getting credit from formal financial institutions has not been significantly reduced from 2007，even rising somewhat after the marketization of interest rates in 2013. The rising interest rate has a positive incentive for developing rural finance service and will help reduce the credit costs. Ninthly，deposit is the basic means of wealth management for farmers. The proportion of external investment of household is very low and the proportion of deposits is very high. On the one hand，it may indicate that farmers’ investment capacity is still very weak； On the other hand，it also indicates that farmers’ investment channels are little. An important reason for the rural fund-raising fraud in recent years is lack of financial investment channels and knowledge for rich farmers. There are several implications on the method and objective of rural inclusive finance can be drawn from the above conclusions：Firstly，rural area development is the key and aporia of building a moderately prosperous society. Although the number of households with credit demand may reduce，the average amount of credit per household needed is keeping increasing. It is necessary to promote the development of rural inclusive finance to meet the expanding credit demand and new financial services demand in rural area. Secondly，inclusive finance reflects the spirit of “open，inclusive，sharing development”，and it focus on financial services for disadvantaged areas and vulnerable groups，which is drastic of social cognition of profit maximization principal. Therefore，the principal of pushing on inclusive finance should include the combination of market leading and government guiding，as well as the balance of business profit and social responsibility. The government should enact fiscal，monetary and supervisory policies to support and guide the inclusive finance development，while financial institutions and the whole society should change their understanding，emphasizing on their social responsibility. Thirdly，the basic thinking of promoting rural inclusive finance should be to overcome the “invalidity of household’s resource” and “mismatch of rural credit resources”. According to the basic characteristics of farmers’ credit demand，we should promote the service mechanism system construction and financial service and products innovation and reform from the supply side. Fourthly，from the macro-level of the supply side，the government should establish the financial policy system based on the characteristics of the rural financial market，improving the rural financial environment and the rural financial service system，supporting financial institutions to carry out rural financial activities，reducing rural capital outflows，and even leading the urban capital to flow back. To keep pushing on the reform of the rural property mortgage credit pilot； explore the chattel mortgage policy system. Building trustworthy environment to enhance the confidence of financial institutions for developing rural financial business； encouraging and supporting the rural financial institutions to construct credit evaluation system and offer credit loans； confine the business scope of the county financial institution within the county level or below，encouraging the well-operating financial institutions to do business over the counties； continue to improve the existing agriculture-supporting-relending and small-scale-supporting-relending policies，design good poverty-alleviation-relending policy system，and provide low-cost funding resources for rural and small and medium financial institutions to provide agricultural credit services； establish rural inclusive financial development foundation to guide and support financial institutions and poverty alleviation microfinance institutions to support services in poor areas； support the rural internet finance and supply-chain finance development，lead the capital flow to rural areas； improve the rural financial institutional system，support and standardized the development of farm cooperative financial organization within rural community，passing laws for rural cooperative finance based on the relative regulations and lows； regulate and protect the private lending. To strengthen the construction of rural financial infrastructures，especially payment infrastructure in poor areas in rural areas，promoting the settlement accounts，payment instruments and payment settlement networks； expand the coverage of convenient withdraw for farmers in the remote villages； encourage to explore the mobile payment，internet payment and other emerging electronic payment methods to develop payment services market in rural area. The development and application of information technology have provided potential solutions to overcome the difficulties of traditional rural financial service，and it will become the important leading force of rural financial development in the future. According to the advanced principles confirmed in the G20 Hangzhou Summit，the government should improve the rural digital financial services infrastructure construction to promote inclusive financial development. Fifthly，from the financial services and product system level in the supply side，the rural financial institution should break through the restriction of traditional collateral，and build reasonable rural credit evaluation system，especially in areas besides the “two rights mortgage credit” pilot，to sustain the rural inclusive financial service system. They should also innovative financial services mechanisms and product system based on the characteristics of agricultural production，farmers’ living demand，local industry and relative policies and resources. It is necessary to actively develop digital financial technology，improve infrastructure，service mechanisms and products，deepening the rural inclusive financing services. Sixthly，special attention should be paid to reduce inequality in access to formal financial services among households from different income groups. The current precise anti-poverty policy requires financial institutions to provide credit to poor households recorded in the poverty files. This policy may exacerbate inequality in access to formal financial services among households in different income groups，especially for the farmers from sub-low income groups who were not recorded in poverty file. It is not consistent with the target of rural inclusive finance. Therefore，both the macro-level system and the financial institution service mechanism should pay special attention to eliminate such discrimination. Seventhly，to encourage financial institutions to actively and orderly explore new mode of rural investment and financial products and services，broadening the channels for investment and financial management of farmers，expanding the income sources of rural financial institutions. To offer financial education for farmers to protect their rights of financial consumption，cracking down the illegal fund-raising.（AI翻译）