All communes and production brigades are expected to rely largely on their own financial resources for all development activities, wherever possible, even the costs of major construction work. However, state assistance can be sought and obtained when required because of natural disasters or when the magnitude of the investment is far in excess of the production unit's means. The study group was told, in many production brigades and communes, that financing was not a constraint to aquaculture development and that they were able to obtain funds for any worthwhile project without much bureaucratic red tape.
The People's Bank of China, operating at the central, provincial, county and commune levels, as well as city, district and township levels, provides the main banking system and it is closely linked to local credit cooperatives which function under the policy guidance of the Bank. The People's Bank undertakes commercial transactions, including the acceptance of deposits, grant of loans and clearance of payments, besides helping production units to set up new enterprises.
The main source of funds for credit cooperatives is the accumulated savings of production brigades, teams and individuals. As mentioned earlier, communes may also obtain state loans when "public accumulation funds", development funds, or reserve funds, are not sufficient and major investments are required. Even though credit cooperatives accept deposits from individuals, they do not extend loans to individuals. The latter have to obtain credit, if needed from production teams or brigades. Loans are generally granted for one year to supplement working capital, but these can be extended if found necessary and justified. When costly equipment has to be purchased or major construction work has to be carried out, the loans may be extended up to five years. Interest on loans vary: industrial loans are charged 0.42 percent/month; production or business extension loans, 0.36 percent/month; and loans for replacement of facilities, 0.18 percent/month. The rate of interest paid on savings deposits is 0.18 percent/month on current accounts and when a personal loan is obtained, the same rate of interest is charged. A higher rate of interest, 0.27 percent/ month, may be paid on one year fixed-term deposits.
From the information that the study group could gather, it would appear that the system of financing and credit for aquaculture production works smoothly and it has achieved the main purpose of eradicating the middleman and usurer. As will be discussed in a later section, aquaculture has proved to be a major source of "accumulation funds" and the study group was told that in some communes, the income from fish farming provided a good part of the money needed for the purchase of agricultural equipment (October People's Commune - Hubei Province).
The system of agricultural taxation applies also to aquaculture, but tax on fish farming is reported to be less.
In the Ho Li People's Commune in the suburban area of Wuxi, the tax paid to the state is 1.34 percent of the total income of the Commune, of which the rest is distributed as follows:
|
8.98 percent |
set aside as development fund; |
|
5.02 percent |
public welfare fund; |
|
0.42 percent |
reserve fund as insurance against national disasters, wars, etc.; |
|
84.24 percent |
distributed among the workers on the basis of work points. |
