The government is emphasizing modernization, innovation and mechanization to revitalize the farm sector in the current Five-Year Plan
　　
　　The “farm question’’ has long baffled China’s planners. Since 1979, when China began the reform and opening up process, the economy has developed rapidly, especially the secondary and tertiary sectors. By 2005, China’s GDP was 18.2321 trillion yuan, nearly 30 times that in 1979. However, the primary sector has largely been left out of this growth with its proportion in GDP dropping from 25.6 percent in 1979 to 12.4 percent in 2005.
　　Rural areas remain poor and living standards low. Past efforts to change the situation have borne little fruit. The Chinese Government’s most recent proposal to “build a new socialist countryside,’’ mooted by Premier Wen Jiabao and passed at the Fourth Session of the 10th National People’s Congress, China’s top legislature, on March 14, is the most comprehensive initiative to date on breaking through the rural impasse.
　　
　　As China’s 11th Five-Year Plan (2006-10) gets underway, the agricultural sector is poised to receive a major boost aimed at accelerating the development of modern agriculture, stabilizing grain production, raising farmers’ income, strengthening rural infrastructure, promoting the reform of rural democracy and financial and institutional reform.
　　Premier Wen Jiabao said, “We should build up and carry out the concept of scientific development, improve rural living and production conditions, raise farmers’ living standards and promote the whole countryside to take on a new look.’’
　　Chen Xiwen, Deputy Director of the Office of Central Financial Work Leading Group, also said that building a new countryside is the best way to solve the problems plaguing agriculture, the rural areas and farmers.
　　China’s agriculture once made great contributions to social and economic development. The reform and opening up began in the rural areas. In 1980, the household contract responsibility system under which individual farming households were given the right of management of their contracted land and derived an income based on its output, heralded the reform process. This greatly spurred agricultural productivity and the country reaped consecutive bumper grain harvests.
　　In 1984, the focus of the reform process shifted to the cities. For the next 20 years, agricultural surpluses fueled industrial development and rural areas supported urban economic development. Great importance was attached to the development of industry and it began replacing agriculture as the pillar of China’s social economy.
　　During this period, agricultural development stagnated. Farmers’ income remained low and the urban-rural gap began widening. Many farmers could not afford medical care or the cost of their children’s education.
　　
　　Key projects
　　
　　The Central Government’s No. 1 document in 2006 details “the building of a new socialist countryside.” It talks of building areas characterized by enhanced production, higher living standards, healthy rural culture, neat and clean villages and democratic administration.
　　Production can be enhanced by adopting the practices of modern agriculture, innovation, stabilizing grain production, promoting agricultural restructuring, and speeding up the development of resource-efficient and environmentally friendly farming.
　　Higher living standards call for more sustainable avenues of revenue generation for farmers while the fostering of a healthy rural culture involves the speeding up of compulsory education in the rural areas and the establishment of a culture industry.
　　Neat and clean villages will happen only when rural infrastructure is strengthened and sanitary conditions are improved.
　　Similarly, a democratic administration will flow from a completion of the villagers’ self-governance system and a further improvement in the transparency of rural affairs.
　　The Chinese Government is zeroing in on 14 key projects in the next five years for building a new countryside, including establishing large production bases for grain, cotton and oil, solving the problem of a shortage of potable water for 100 million farmers, building and rebuilding over 120 million km of rural roads, completing the provision of rural medical and health care services and enabling the absorption of surplus labor from the rural areas.
　　The center requires all local governments to provide minimum social security for migrant workers and insurance coverage for work-related injuries.
　　According to statistics, there are 940 million registered permanent rural residents. But the actual number of those living in rural areas is about 750 million. About 200 million farmers are estimated to have joined the ranks of the migrant workers.
　　Premier Wen said the first priority in the new measure to improve the countryside is to develop modern agriculture and promote a steady expansion of grain production and a sustained increase in farmers’ income.
　　By 2010, China’s grain production capacity is expected to reach 500 million tons. Grain output in 2005 was 480 million tons, while grain demand was 499.5 million tons. A grain production capacity of 500 million tons can make China self-sufficient in grain.
　　Du Qinglin, Minister of Agriculture, said that in the next five years, China will try to increase grain output, raise the efficiency of agricultural resource use, cut costs of agricultural production, improve comparative and comprehensive profits of agriculture, enhance international competitiveness of China’s agriculture and keep farmers’ income rising by more than 5 percent annually.
　　
　　Financial support
　　
　　“Central Government budget expenditures for agriculture, rural areas and farmers this year will total 339.7 billion yuan, 42.2 billion yuan more than last year,” said Premier Wen in his Report on the Work of the Government. This figure is 14.2 percent more than that of last year.
　　He also said that China would work resolutely to reorient investment by shifting the government’s priority in infrastructure investment to the countryside. This mainly involves strengthening the basic development of farmland, with the focus on small water conservancy facilities; improving the system of flood control, drought resistance and disaster reduction; accelerating the construction of infrastructure projects such as roads, drinking water supplies, methane facilities, electricity grids and communications; improving the living environment in rural areas; and accelerating the development of rural public services, such as education, health and culture.
　　Among the measures to be taken to accomplish these goals are: higher allocations from the central and local government budgets and credit funds, integration of all agricultural investments to improve capital performance, guiding farmers to invest capital and labor in public welfare facilities that benefit them directly, encouraging and guiding the investment of non-state funds in rural development and gradually establishing an appropriate, stable and effective investment mechanism.
　　Specific plans have been laid out for central budget resources such as the following:
　　-- Rural education: Over the next two years, tuition and miscellaneous fees for all rural students receiving compulsory education will be eliminated. Central budget expenditures for compulsory education will increase by 218.2 billion yuan over the next five years.
　　-- Rural healthcare: Establishment of an adequate rural healthcare system will be speeded up. More than 20 billion yuan has been earmarked for the next five years to renovate hospital buildings in towns and townships and in some counties and to upgrade their equipment.
　　Establishment of a new type of rural cooperative medicare system will also be accelerated. Ongoing trials will be extended to 40 percent of the counties this year. Central and local governments will increase allowances to farmers participating in the system from 20 yuan to 40 yuan. The central budget will set aside 4.73 billion yuan for this, representing a seven-fold increase over last year. It is expected that by 2008, this new system would have covered all rural areas.
　　-- Subsidies: Direct subsidies for grain production, subsidies for growing superior grain strains and subsidies for agricultural machinery and tools will be provided to farmers. This year, direct subsidies for grain production will top last year’s by more than 1 billion yuan. Subsidies for growing superior grains and for agricultural machinery and tools will also be increased by a large margin.
　　-- Poverty alleviation: The Central Government will give more financial support to less developed regions this year. Budgetary support to central and western regions will reach 135.9 billion yuan, 23.8 billion yuan more than last year, a year-on-year increase of 21.2 percent. Support to ethnic minorities will amount to 20 billion yuan, 4.077 billion yuan more than 2005, rising 25.6 percent year on year.
　　The central budget will also earmark 13.7 billion yuan as a poverty-alleviation fund, 700 million yuan more than last year. Infrastructure construction in poor villages will be given key support. Funds will also be made available for agricultural industrialization and for training poor laborers to be transferred to non-agricultural sectors.
　　-- Rural governments: Rural governance used to depend on the agricultural tax. Since this tax was abolished from this year, the government will apportion more than 100 billion yuan annually for town and township governments and to meet the needs of rural compulsory education. This figure comprises 78 billion yuan in transfer payments from the central budget and more than 25 billion yuan from local budgets.
　　-- Road construction: In the next five years, the government will set aside 100 billion yuan for constructing rural roads.
　　
　　Graduate village chiefs
　　
　　According to the Beijing Municipal Government, several measures have been passed to encourage college graduates to work as village officials. This year, Beijing will recruit 2,000 college graduates to assist heads of suburban villages in building a new countryside.
　　Rural China has more than 480 million laborers, of whom illiterates or primary school graduates account for 37.3 percent, junior middle school graduates account for 50.2 percent, senior middle school graduates, 9.7 percent, technical secondary school graduates, 2.1 percent, and junior college or college graduates, only 0.6 percent. This means those with junior middle school degree and below total 420 million or 87.5 percent of rural laborers.
　　“While rural areas are in transition to modern agriculture, it will be very difficult to finish industrial restructuring based on a group with such low education,’’ said Zhang Baowen, Vice Minister of Agriculture. “College graduates serving in rural areas can help farmers accept new concepts and grasp new technologies.’’
　　Many local governments are now encouraging college graduates to serve in rural areas. In central China’s Henan Province, 3,000 college graduates are acting as village officials. It is believed that 80 percent of them have helped promote local development.
　　Zhang Baowen said the Ministry of Agriculture will increase funds for farmers’ education or training. This will include:
　　-- Equipping farmers with scientific knowledge and skills: In 2003, 22.96 million farmers received such training. The target is to reach 16 million more by 2010 to ensure there is one trained person for every eight rural households.
　　-- Training rural laborers in skills required by the non-farm sector: Since 2005, the Ministry of Agriculture and five other ministries have helped 2.2 million rural laborers make the transfer to the non-farm sector.
　　-- Implementing the “plan of training 1 million technical secondary school graduates”: Over the next 10 years, the Ministry of Agriculture will implement the “plan of training 1 million technical secondary school graduates,” to deal with planting, breeding and processing, as well as rural management and farm technology.
　　Minister of Agriculture Du Qinglin has pointed out that attention must also be paid to contradictions existing in agriculture and rural economic development.
　　Raising agricultural productivity is no mean task. It is difficult to sustain growth in farm income. The international competitiveness of agriculture remains weak and exports of agricultural produce trigger trade conflicts and technical barriers. Agricultural innovation continues to lag behind.
　　Chen Xiwen said providing social security coverage for farmers is a major hurdle in building a new countryside. Statistics show that in 1,000 counties in 10 provinces, rural minimum living standards have been adopted, benefiting 4.8 million villagers or 2.53 million households. “However, the problem of rural minimum living standards hasn’t been solved in general,” said Chen.
　　Rural financing is another bottleneck. In recent years, state-owned commercial banks have been retreating from remote rural areas. There are no financial institutions, except rural credit cooperatives, whose strength is limited.
　　“An overriding dependence on central and local budgets in the absence of rural financial institutions would mean that rural areas will develop very slowly,” he said.
　　
　　Putting Rural Policy on the Front Burner
　　
　　A “new countryside” is not a new concept. In 1956, the Chinese Government set a goal of restructuring rural areas, but that was not specified in its work agenda. In early 2006, the Central Government released its first major document of the year, which calls the construction of a “new socialist countryside” the foremost task facing China in the 2006-10 period. Why did the government put the goal on its agenda this year? Chen Xiwen, Deputy Director of the Office of the Central Financial Work Leading Group, said the concept has been put forward for at least the following five reasons.
　　First, the agricultural infrastructure is not adequate to meet the requirements of economic and social development and the improvement of people’s livelihood. Viewed from the perspective of food, while grain output has been recovering in the past few years, it is still not enough. In 2005, China’s grain output climbed to 484 million tons, 50 million tons more than in 2003, but still insufficient to meet demand and nearly 30 million tons lower than the record high in 1998.
　　In 2005, the total grain demand was about 500 million tons, 10 million tons more than supply, which had to be supplemented by imports. The scarcity of farmland and water resources constitutes a bottleneck limiting the development of agriculture. More investment should therefore be pumped into the agricultural sector to improve production conditions, further the application of new agrotechniques and increase the output of farmland.
　　Second, the widening gap between urban and rural areas should be dealt with in earnest. Since China is a populous nation where the rural population makes up the majority, bridging the urban-rural gap is bound to be a long process. However, top concern should be given to this process, as the gap tends to grow wider against the backdrop of accelerated industrialization and urbanization at present.
　　Farmers’ per-capita net income and urban dwellers’ disposable income were 3,255 yuan and 10,439 yuan, respectively, in 2005, with the latter figure 3.22 times the former. The gap in income has widened compared with the period before 1978, when China initiated its reform and opening up policy. In 1978, the per-capita income of the rural population was 134 yuan and that of the urban population was 343 yuan, with the latter 2.57 times more than the former.
　　Currently, the widening income gap has drawn the attention of all segments of society. One significant aspect of stepping up the construction of a new socialist countryside is to narrow that gap.
　　Meanwhile, the rural-urban divide is more compelling in terms of infrastructure and social issues such as education, health care and culture, a drawback that greatly hinders the improvement of farmers’ quality of life.
　　Third, initial conditions for industry to power agriculture and urban areas to help rural areas have emerged. China’s gross domestic product (GDP), fiscal revenue and fixed assets investment totaled 18.2 trillion yuan, 3.16 trillion yuan and 8.86 trillion yuan, respectively, in 2005. This compares with respective figures of 8.95 trillion yuan, 1.34 trillion yuan and 3.3 trillion yuan in 2000. These three indicators were more than doubled during the 10th Five-Year Plan period from 2001 to 2005. In the meantime, the agricultural contribution to GDP shrank to 12.4 percent from 25.6 percent in 1989. The proportion of residents living in rural areas has plummeted to 58.2 percent of the national population from 74.0 percent in 1989. It is an urgent task to promote harmonious development between rural and urban areas.
　　Fourth, a new socialist countryside is an essential requirement for boosting domestic demand. Economists believe that investment, consumption and foreign trade are three engines of GDP growth. Currently, investment and foreign trade have been the major forces driving the Chinese economy, while consumption has not been fully brought into effect.
　　An important reason is that more people live in the countryside, which accounts for a small market share. Farmers’ low income and lack of purchasing power have in effect adversely affected the implementation of the strategy of expanding domestic consumption. Only 32.9 percent of total retail sales of consumer goods in China were realized in counties and rural areas under counties in 2005.
　　Fifth, it is also an essential requirement for shaping a harmonious socialist society, achieving social fairness and justice and enabling all the people to share the benefits of economic and social development.

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