This Technical Paper is a study of the working of urban credit cooperatives in China. It begins by putting the German, French, US and Japanese experiences into perspective, before constructing a macroeconomic analysis of the operation, institutional context and the role of urban credit co-operatives within the savings and credit systems. A survey of 57 cooperatives in eight Chinese towns is used to study credit co-operative activities at the micro-economic level. The survey shows that within their heterogeneity the credit co-operatives generally ignore the laws governing banking operations. Unsurprisingly, the most profitable are located in the fast-growing coastal regions, but they tend to use a large proportion of their funds for loans to the state, rather than the co-operative, sector ...