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Deeper income gap calls for reform to solve deeper conflict

(Xinhua)
Updated: 2008-09-13 14:27

A recent special report of the Chinese State Council raised a pair of paradoxical figures that reflected one of the most difficult problems of the Chinese economy.

According to the report to the Standing Committee of the National People's Congress, the per-capita disposable income gained 9.5 percent to 4,140 yuan ($608.8) in real term in 2007 in the countryside, the largest annual growth since 1985.

But the largest growth is not accompanied by a smaller urban-rural income gap. During the same time, the average city dwellers received an income that was 3.33 times larger than rural residents. The income disparity amounted to 9,646 yuan, marking the largest income gap since the reform and opening up of China in 1978.

The income ratio, a gauge of balanced social development, has been enlarging since 1985, when the income growth of rural residents slowed down as the focus of reform moves from countryside to cities. Though rural income growth once hit 9 percent in 1996, it was gradually reduced to 2.1 percent in 2000.

After government took major stimulative policies, including tax reduction, in the following years, the income growth of rural residents recovered to a higher level. For four consecutive years from 2004 to 2007, farmers saw a more-than-300-yuan increase in annual income, which means an increase of more than 6 percent.

However, despite the improvement in farmer's disposable income, the urban and rural income gap has continued expanding in recent years. According to the National Bureau of Statistics (NBS), the income ratio was 2.57:1 in 1978, and was reduced to 1.80:1 before it grew to 3.33:1 in 2007.

Minister of Agriculture Sun Zhengcai has called for more technological and financial support for the rest of the year to help farmers increase their incomes.

Though farmers' income rose at a rapid pace, the foundation for their income growth remained weak, and the channels for farmers to make money is limited, said Sun, calling for the establishment of a long-term mechanism to boost rural income.

Of the 2,528 yuan per capita cash income of farmers in the first half this year, an average of 785 yuan was earned by doing non-farming jobs, often as migrant workers in cities. 1,080 yuan per capita was gained from selling agricultural products, and 336 yuan from running businesses.

The skyrocketing producer price index, the rising wages for migrant labor and the growth of subsidies are said to have contributed to the major rise in farmer income this year.

But the increase would be nibbled away as farming costs increased because of more expensive materials. Alternative sources of employment are also diminishing as many export-oriented factories shut down in coastal areas, which employed mainly migrant workers.

How to effectively boost farmer's income and narrow the urban-rural income gap triggered widespread discussion of deeper conflict in the economic and social development of Chinese society.

Yan Chengzhong, director of the Institute of Economic Development and Cooperation of Shanghai Donghua University, attributed the problem to the disparity of urban dwellers and rural residents not only in income, but also in areas of education, medical care and welfare.

Measures have been taken to improve infrastructure and rural production. In 2007 alone, the central government allocated 420 billion yuan from the treasury for rural development, a sum which almost equals aggregate government spending in rural areas from 1998 to 2003. The allocation in 2008 is said to be even higher.

But the central task should be the reform of the existing dualistic economic structure of cities and the countryside in the next round of development in China, said Li Yining, a well-known economist who had proposed the ongoing shareholding system reform in China.

Since 2007, the central government has initiated a pilot reform in two rural experiment zones in Chongqing and Chengdu, where the government explored ways to provide service in employment, education and social securities that equals those provided to urban dwellers.

President Hu Jintao stressed the urgent demand to push forward reform and development in the countryside in a recent three-day visit to central Henan Province, calling for vigorous efforts to improve rural operation mechanism, promote the transformation of agricultural business mode and optimize the system supporting the development of agriculture and rural areas.

The issue would be the major topic in the upcoming Third Plenary Session of the 17th Central Committee of the Communist Party in October. A Party meeting in 1978 had kicked off the reform and opening up of China. Whether the meeting produce major decisions that would make effective progress in improving farmers' lives is the major concern of the people.