China has the clear potential of quickly becoming a world leader in microfinance serving more poor than any other country of the world.There is a huge potential demand and positive experiences have been gained in the delivery of services by NGOs.With the advent of the WTO and its accompanying financial sector reform measures，the commercial banks -including the ABC，may move even further away from serving the needs of the poor，and small and medium entrepreneurs.However，microfinance in China is still in its start-up stage after introduction within the last decade.Along with some other Asian countries such as Bangladesh，India，Indonesia，the Philippines，Mongolia and Cambodia，the progress of microfinance development in China has been slow.However，the outstanding loan portfolio of microfinance in China，if government-operated microfinance is includedIt was estimated that the total loan portfolio of microfinance in China in 2000，including those operated by the government，international donors，NGOs and RCCs is around 10 billion yuan，or US$1.2 billion（Wu，2001）.，may be one of the highest in Asia.The purpose of this paper is to analyse and discuss the policy issues facing the development of microfinance in China，and to provide suggestions to the stakeholder community of how a partnership for progress could be established with specific policy，legal and regulatory recommendations for moving forward.