February 22, 2011 / 7:04 AM / 9 years ago

Q+A: Rural prosperity key to China's future

BEIJING (Reuters) - China’s government believes that improving incomes and welfare in the countryside is crucial to securing economic growth and averting discontent that could fester into threats to Communist Party rule. Here are some questions and answers about China’s countryside and the policies of President Hu Jintao and Premier Wen Jiabao.

HOW MANY PEOPLE LIVE IN THE COUNTRYSIDE? According to the latest official findings, China’s rural population numbers 720 million, including migrant laborers who work away from farms for long stretches but may keep links with their families and send back money. By the government’s most recent count, China has about 242 million rural residents who work off the farm, and about 153 million of them are migrants who work outside their home towns. While urban Chinese couples are usually limited to one child under the government’s tough family-planning rules, rural couples usually have two children. Rural families that try to have more than that face heavy fines and forced abortions. Many rural couples are choosing to limit the number of children themselves, so they can be better off.

WHY DOES THE COUNTRYSIDE MATTER?

China’s ruling Communist Party came to power in a revolution that vowed to liberate the peasants, and that historical legacy weighs on leaders.

But the rural policies pursued by Mao Zedong skewed revenues toward cities and created a system of residential permit (hukou) barriers, in which rural migrants got far fewer of the welfare protections afforded to many city-dwellers. With the break-up of Mao’s communes from the early 1980s, farmers gained lease-hold rights over family farmland and could move to find work. But many of them lost the rudimentary healthcare available under Mao, and until recently few farmers were entitled to healthcare, old-age payments or other welfare.

The push to improve the countryside reflects deepening recognition in China that these inequalities between urban and rural areas have stirred discontent and has kept rural residents, including migrant workers, from joining the rising domestic consumption that Beijing hopes will drive growth.

WHAT HAS THE GOVERNMENT BEEN DOING? Since they came to office in early 2003, Chinese President Hu Jintao and Premier Wen Jiabao have increased spending on the countryside and removed some policies that angered farmers.

They pushed to end “agricultural taxes” on farmers, which levied fees on rural residents for farmland irrespective of whether the land was being farmed and how much money farmers made. The abolition of the taxes by the start of 2006 was widely welcomed by villagers, who saw them as a means for local officials to extort additional, unlawful payments.

Since then the government has begun giving farmers subsidies for agriculture. Most families earn a few hundred yuan a year from the subsidies; not a huge amount, but every little bit counts for poor villagers. Beijing has also been pushing schemes to extend basic healthcare, old-age payments and minimum income assistance to rural residents, and to cut the costs of giving rural children an elementary education. Rural residents pay a small sum to join the insurance scheme, and local and central governments contribute funds, which are then used to reimburse hospital fees for drugs and surgery. Coverage is higher in wealthier coastal provinces.

HAVE THE POLICIES WORKED? Living standards and income in rural China have been rising, but it can be difficult to disentangle how much of that is due to government policies and how much reflects broader economic growth, said Terry Sicular, an economist at the University of Western Ontario who studies inequality and income in the Chinese countryside. “My educated guess is that it’s a combination of factors — growth and policies,” she said in an emailed response to questions. “There have been investments in rural infrastructure — these also may have had an impact. Recent rising food prices should contribute to further increases in farming income.” WHAT COMES NEXT? The Chinese government has said it will keep increasing spending on the countryside and also encourage continued rises in rural incomes from farming and migrant labor. The biggest longer-term challenge will be how to handle the shift as hundreds of millions of farmers move off the land hoping to settle down for good in towns and cities. That will test urban services and job markets, and increase pressure for major changes in China’s current land policies, which give farmers leasehold rights over land, but do not allow them to own or sell that land.

Reporting by Chris Buckley; editing by Bill Tarrant

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