China is a big agricultural nation. Of the 1.3 billion people in China, 800 million live in rural areas. For more than two decades, implementation of reforms and opening-up policies have brought remarkably rapid economic growth to China, but the rural/urban income gap keeps expanding.
Up until 2004 the ratio of rural to urban incomes amounted to 1:2.9. In recent years, more and more priority has been given to the rural sector in China’s national budget. This is well demonstrated by the annual outlay of Rmb262.6bn ($32.5bn) from central finance in 2004 solely for the purpose of rural development, representing a year-on-year increase of 22.5%.
As a crucial effort to enable farmers to benefit equally from the country’s economic achievement, public finances have targeted support to rural areas and the rural populations in need.
Elimination of tax
By now, the effort of the Chinese government to eliminate the agriculture tax on farmers in several provinces has been greatly extended to reach most provinces. The government has committed that by 2006, the agriculture tax will become only a term recorded in China’s history books following more than a thousand years of its involvement in the country’s economic evolution. In 2005, the central finance budget of China has laid out in the form of a transfer payment to local governments a sum of Rmb66.4bn for the purpose of gradually getting rid of the agriculture tax, thus substantially reducing the burden on farmers.
The government has also committed that in three years’ time from now, China will provide free nine-year compulsory education in real terms to rural families. In 2006, rural school-aged children in western China will be the first to enjoy such free education. Along with this, more public funds and educational subsidies will be made available to poor rural families and to rural schools. In addition, central finances also consistently earmark special funds to support technical training programmes for rural migrant workers to improve their competitiveness in the labour market.
Healthcare focus
Healthcare issues in rural areas have also been given great attention by the Chinese government. For years, the government has been trying to improve the rural cooperative medical system and set up a proper national public healthcare system covering all, including the rural population, so as to effectively alleviate and prevent disease-induced poverty. In 2006, China plans to increase the coverage of the rural cooperative medical system from the current 20% to 40% of the rural population by providing stronger fiscal support.
It is gratifying to know that in the 1978-2004 period, the rural poor population in China has decreased from 250 million to 26 million, a great contribution to the reduction in world poverty and in achieving the Millennium Development Goals.
However, the tasks ahead are still arduous. In the upcoming 11th Five-year Plan (2006-2010), rural development is listed as one of the government’s top agenda items. In order to achieve that, more timely and effective fiscal support will be in place to stimulate growth and the advancement of China’s rural sector.
Jin Renqing is China’s minister of finance. Progress: China’s rural poor population fell from 250m to 26m from 1978-2004, the government claims
