The High-Cost and Short Term Credit Legislation in China - Coursework Example

Policy Report for the consumers’ association on high cost and short term credit legislation in China Introduction This strategic report is written to the China consumers’ association advising of the strategic decisions that ought to be taken to demand more policy change. The policy area that should be examined is the high-cost and short term credit legislation. The consumers of the credit facilities in this great nation tend to incur a high cost on the short term credit. The creditors take the advantage of the urgency and importance of the credit to the borrowers and charge them high-interest rates without considering that they are short term credit. The lenders need to be fair enough to at least charge fair interests since it is a short-term credit. The short term credit facilities are implemented at a national level hence it is not easy for the consumers to run away from this problem (Lieberthal & Oksenberg, 1988, p.13). Therefore, it is the responsibility of the consumers ‘ association to try to convince the national government to reexamine the issue so that the consumers do not incur such huge costs when they credit itself is going to be refunded within a short period. The report begins by showing the background of the policy. Later on, it would show relevant policy theories that would help in understanding the nature of the policy to and give the guiding actions that should be taken to support the changes. Policy issue- High cost and short term credit legislation in China High cost and short term credit legislation have been a growing controversial issue in China among the many consumer groups. There are lenders who give out small cash in the form of credit to the borrowers to enable them start a business, revamp the collapsed business, to pay bills, buy homes and many other emergencies. However, these lenders offer these credit facilities at a much higher cost in terms of interest rate(Lieberthal & Oksenberg, 1988, p.15). The consumers feel that they are very much vulnerable to these exploiters because the policies touching on this issue do not provide enough cover to shield them from this exploitation (Hutchens, 2013). Many reforms have been done in this area, but it seems there are still some loopholes that allow the lenders to prey on the borrowers. One of the recent reforms that have been enacted by the China government is that there is a requirement for all short-term creditors to seek a license from the government authorities before operating such a business. Some regulations have been put the amount of fees or interests to be charged on these credit facilities (Sabatier 1987, p. 42). Initially, the consumers welcomed the reforms that were made to protect them from the unscrupulous creditors. However, some lenders have again defied the regulations and charge their own interest. Thus, the consumers are suffering silently since the government has not addressed the issue properly. Path to be followed by the consumers’ association For Chinese consumers’ association to make the government respond to this concern, it must concentrate on two areas. The first area that needs emphasis is agenda setting. Agenda setting is the first step that should be taken when making a policy. In this stage, this consumers’ association should set the agendas by recognizing and defining the significant problem that is in the public domain (Birkland 2001, p. 9). At this stage, it should choose carefully the words to be used so that they can attract the attention of the government or the stakeholders who should approve the policy. In setting the agendas, the makers should show how other laws have covered that particular area and then show the loopholes that exist that are pushing them to raise a concern for it to be filled (Dolowitz & Marsh, 1996, p.78). Thus, this consumer association should ensure that the issue is firmly in the hands of the authority and pile pressure on the government to convince it to adopt the proposed changes. The second area that should be focused on by the association is entire policy network to know how it would influence the proposed changes. This is important since there would be a counter force from the lenders that would be opposing these changes. The association should understand the laws surrounding this area of concern and be able to explain to the government clearly how these laws are not covering them against this oppression of the lenders. To come up with good reasons, they should consult other stakeholders and experts to gather more evidence that would support their arguments Birkland, T. (2001). This group should also ensure that the policy being developed should be formulated in a way in which it is consistent with the government program. Moreover, they should do a little bit of research on the same issue presented to find information from outside the country to find how other governments have addressed the problem (Birkland 2001, p. 14). This would help them to give evidence and examples to the government on how the policy if implemented would be of importance to them and the government at large. Thus, this should be an evidence-based policy making process (Weiss, 2010, p. 1). We examine the consumer’s association agenda setting process from the perspective of “garbage can model”. There several potential actions identifiable that can be used to by the association to attain their intended goal. The Garbage can model points put that any item on the government agenda is composed of three streams that combine to arrive at specified results (Cohen, March, &Olsen, 1972, p.67). This model asserts that if a problem is well recognized, then there would be always a solution. For this consumers’ association, there is a need to take the required action to push for the actions to be taken by the government over the pressing issue. On the first account, this association should make sure that the really problem is recognized; to do this, they should seek for a strong evidence of the inappropriate behaviors or oppression of the lenders to present it to the government as it argues its case (Sabatier 1987, p. 42). At this moment, the “agenda setting ingredient” model can be adopted to finding out which buttons to press to recreate more awareness of the issue. When the association manages to enlighten many people and other stakeholders to know that there is a problem in the process of lending, then these stakeholders would help in piling pressure to the government to consider adopting the proposed amendments to the issue in question (Cohen, March, &Olsen, 1972, p.35). Other inappropriate cases outside China should be cited to prove to the government that when this behavior of the creditors is not regulated in time, it would cause problems in future the way it has happened in other countries. Moreover, the association should engage the media to bring the issue on the public domain so that individuals can give their opinions and suggestions that would strengthen the proposed policy. Secondly, the association should make sure that there is a policy solution to the raised issue. It should carry some reviews in the existing policies and consider making changes in the existing by suggesting the appropriate solutions. In this stage, the formulators should not only suggest solutions but they should also estimate the expected outcomes, the impacts and even the effects of each alternative solution. They should determine if the chosen outcomes would meet the expected goals (Murray & Lopez 1997, p. 1347). In this stage, the association should also choose the best format for display of the alternative solutions chosen. This would help them during the presentation when they would be asked by the government to provide other available alternatives. To succeed in this plan mentioned earlier, the association should try to do some research in the international community to draw some examples which they can point out to the government on how they manage the issue of high cost, short term credit legislation. It should draw these examples from those countries that have succeeded in protecting the consumers from the exploitation by the lenders (Cohen, March, &Olsen, 1972, p.67). For example this problem, has been in Australia but recently, Australia has tried to deal with it by enacting some regulations that check the operations of the lenders to find out if they are defying the laws governing the lending. Therefore, the association should cite Australia as one of the countries that have succeeded this war. Furthermore, it should prove to the government that since the reformation in Australia, lenders have become more responsible and the consumers are now enjoying the fruits of the reforms. Leveraging policy transfer theory states that political actors or even the decision makers in any country usually draw lessons from other countries when formulating policies (Dolowitz& Marsh 1996, p.3440). This means that when the association cites examples from other countries and presents the issue to the government, it is likely that the government would accept and adopt the proposed policy. The use of example from another nation is the association’s effort to make the government to be dissatisfied with current policies concerning the issue (Sabatier 1987, p. 42). It should strive to create new interests in this area so that the government can re-examine it again and adopt the proposed changes which would be beneficial to the consumers. The third area of focus on agenda setting is examining the political climate. There are times when the government is quite sensitive to the issues raised by the citizens. In most cases, when the elections are approaching, the political figures in the government would come close to the people, this is the right time for this consumers’ association to present this issue (Fiji, 2007, p.1). The political figures would push it faster so that it can be adopted to attract the attention of the voters. Therefore, the association should assess the political climate in the country and time when to come up with this issue (Sabatier 1987, p. 31). In fact, when this proposal is presented when the political temperatures are high, nobody would want to examine it in details, but it would get an approval within the shortest time possible. Another issue which the association seeking the amendments of the high-cost, short-term credit should do is that it should develop and build coalitions with another stakeholder to assist in pushing this agenda to go through. The coalition should consist of experts who would give expert advice where necessary so that when the policy is presented for approval by the government, it goes through (Fiji, 2007, p.1). The players involved in the changing the policies are beyond the traditional administrative and legislative communities. Such an exercise needs a range of players drawn from different groups such as researchers, journalists and policy analyzers. Thus, the involvement of different actors in the process leads to another action that was identified earlier as building networks to push for the action by the government. The policy network takes many forms however, it relies the government links and the dependence on the other external actors with the beliefs and interests in the policies being formulated. Therefore, the association should be able to understand how it interacts with other stakeholders to push for the policy change (Sabatier 1987, p. 74). One of the importance of identifying other actors is that it helps in identifying who can work perfectly with the association to draw further to the direction of the policy (Cohen, March, &Olsen, 1972, p.26). One important note the consumers, association should take care of is that it should be careful with the opposition force from those opposing the proposals. It is obvious not all stakeholders would welcome the amendments because they know that their business would be affected by these changes (Fiji, 2007, p.1). Thus, they would work hard to water down the issue to continue benefiting. The lenders may even use the political figures in the government to help in rejecting the changes in the policy. Therefore, the association should plan well and choose careful actors who would assist in attaining the goals. Recommendation for consumers association From the discussion, a number of actions that ought to be taken by the association come out. First, the association should keep on creating awareness in the public domain so that the government can feel the pressure from all sides to bow to the demands. Secondly, the association should continue searching for credible evidence from the exploitation of the consumers by the lenders so that it can be in positions to convince the government that it is an issue f concern and a problem in the society. Thirdly, this consumers association should continue building network through coalitions with experts and the political figures that would assist in pushing for the adoption of the changes of the policy. This would lead to faster adoption and implementation because of the support these partners would give. Another thing is that the association should read the political climate when it wants to present the proposal to the government. When it present it during the high political climate, it is likely that it would be adopted faster because of the push by the politicians seeking posts during the elections. Another action which the association should do is to seek references from other countries and identify countries that have managed to control the lenders from oppressing the borrowers by charging high interests rate on short-term credit. The examples from other nations would be good evidence that the government would look at to consider adopting the proposed changes in the policy. Bibliographic references Birkland, T. (2001). Introduction to the policy process. London; M.E Sharpe. Birkland, T. (2006). Agenda setting in public policy. Handbook of public policy analysis: Theory, politics and methods. Sydney; CRC Press, pp63. Cohen, M., March, J &Olsen, J. (1972). “A garbage can model of organizational choice.” Administrative science quarterly. Vol. 17(1); p 1-25. Accessed on 11th March 2015. Retrieved from http://www.unc.edu/~fbaum/teaching/articles/Cohen_March_Olsen_1972.pdf Dolowitz, D& Marsh, D. (1996). Who learn learns from whom: A review of the policy transfer literature? Political studies. 44: p 343-357. Fiji, N. (2007). Policy formulation and analysis. Accessed on 7th March 2015. Retrieved from http://piango.org/CapacityBuilding/ADBRETA/PIANGOADBRETA6319_RegCSOWsh op_4-PolicyFormandAnalysis.pdf Hutchens, G. (2013). Westpac’s risky dealings with a payday lender cash converters. The age Lieberthal, K & Oksenberg, M. (1988). Policy-making in China: Leader, structures and process. New Jersey; Princeton University Press Mucciaroni, G.(1992). “The Garbage can model and the study of policy making.” A critique. Polity, 24(3); p 459-482. Rhodes, R. (2006). Policy network analysis. The Oxford; Sabatier, P. (1987). “Knowledge, Policy-oriented learning, and policy change: An advocacy coalition Framework.” Science communication, 8: p. 649-692. Woll, P. (1981). Public policy. New York; University press of America Read More