Home Institution

Georgetown University

Publication Date

Spring 2010

Program Name

China: Chinese Culture and Ethnic Minorities


Microfinance in China can be unexpectedly described by an old Chinese proverb that literally translates “Dongshi, the ugly maiden, furrows her brow.” In this story, a famous Chinese beauty, Xishi, falls ill and as a result begins to clutch her stomach and furrow her brow in pain. Despite her sickness and her anguished expression, everyone continues to comment on her breathtaking beauty. One day her neighbor, another maiden named Dongshi who is known for her ugliness, notices Xishi’s facial expression and, taking note of everyone’s comments about her everlasting beauty, decides that in order to be beautiful she should imitate this expression. Not only is she unaware that Xishi’s furrowed brow is the result of her illness rather than a fashion statement, but she also fails to realize that imitating this expression only makes her less appealing. While I do not intend to peg China as Dongshi, the ugly maiden, in some ways the country’s experience with microfinance resembles her plight; despite best efforts, not a few microfinance programs in China have gone straight for imitation and missed the practice’s main objective of poverty alleviation. In particular, the Grameen Bank lending model popularized in Bangladesh served as the go-to example for almost all microfinance programs established in China starting in the 1990s. After years of experimenting with the methodology in China, microfinance experts have revealed the flaws of this imitation and compared the unique differences between China and countries in which the Grameen methodology is successful (see Park and Ren, 2000 and Jackelen and Mi, 1997). But imitation aside, the key is that most microfinance programs in China are largely missing the main goal of microfinance itself: banking for the poor, low-income, and those with limited financial access, in some cases women. My findings from researching a program established by the United Nations Development Program (UNDP) in Malipo County, Yunnan illuminate an example of this “mission drift” and shed light on some of the most common challenges and successes of establishing microfinance in China. In this report, I will discuss my experiences observing this program, which I first learned of by reading a former student’s report on its situation ten years earlier in 2000 (Tsien, 2003). This paper is by no means intended to give an overall portrait of microfinance in China, but instead aims to discuss the experiences and issues of this particular UNDP-sponsored program in Malipo County, Yunnan Province. It is my hope that the cases and recurring themes that I encountered will provide further insight into the challenges microfinance faces in China and contribute to the broader discussion that surrounds the industry’s growth. Specifically, I hope to point out the changes that have occurred in the program since its establishment in 1996 and discuss which of these I feel to be detrimental to the broader goal of microfinance as a method for poverty-alleviation. I will begin with a brief introduction of the development of the microfinance movement in China, highlighting where this program falls and its relation to the industry’s progression. This summary will be followed by a detailed description of the Grameen Bank lending methodology, which has been the model exclusively used for microlending in China. I will then give an overview of the early history of the case study program, focusing on its structure and initial goals. At this point I will go into my personal research of the program, introducing the geography and characteristics of the program site and discussing my findings regarding the program’s evolution, successes, and challenges. This discussion will include mention of themes I find unique to microfinance and rural finance in China, in addition to common problems I found among the program branches. I will conclude by presenting the implications of this type of program’s development for the future of microfinance in China.


Economics | Growth and Development


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