One of Huang Yukui's aunts lives in a poor village in west Liaoning Province and after 10 years of hard work, she and her husband still inhabit an aging adobe house. The income from farming is just enough to keep their body and soul together, and their son, earning a monthly salary of 400 yuan (US$48.31) working in a near-by city, has to save up for three years for his wedding. "Without medical insurance, the family simply doesn't know what to do if anyone gets badly ill," said Huang Yukui, secretary of the Jianbalahuang Village Party Branch, Xinshi City, Liaoning Province.

But Huang's other aunt, whose husband is an urban resident, lives in a flat with air-conditioning, color TV and refrigerator. Food and clothes are not a problem to them at all and the couple can comfortably save 10,000 yuan (US$1207.73) every year.

Now rich people in cities send their children abroad to receive an international education, Huang Yukui continued, but some village children have to drop out of school at grade five or six of primary school because of poverty.

Statistics show that in 2003, the income of farmers in China averaged 2,622 yuan (US$316.67) while that of urban residents averaged 8,500 yuan (US$1,026.57), more than three times that of their rural counterparts. By contrast, most other countries have an urban-rural income ratio of 1.5 to 1, according to statistics from the World Bank.

And there is more about the income imbalance. Of a farmer's 2,622 yuan annual income, 40 percent, or 1,048.8 yuan (US$126.67), is converted from material objects and another 20 percent has to be invested in next year's farming, leaving a farmer's disposable cash income probably less than 1,000 yuan (US$120.77). In contrast, urban residents don't have to spare their money for production, while enjoying benefit from all kinds of social welfare like medical and unemployment insurance.

Three famous scholars, namely, Wang Shaoguang, Hu Angang and Ding Yuanzhu, gave a serious warning in their report entitled "Social Instability Behind Economic Prosperity" in 2003, claiming that economic prosperity will not necessarily or automatically lead to social stability. In Chinese history, serious social crisis often took place when the economy boomed. The experience of many developing countries also tells that unfair and imbalanced economic growth may suddenly fall into stagnation, recession or even collapse because of social crisis.

At present, China has once again entered a period of social instability, the report goes on, and the government should listen to the voice of people, advocate a policy of benevolence, and thus resolve public discontent.

A large agricultural country, China has a 1.3 billion population with 900 million farmers. The problem of agriculture, rural area and farmers has been a main obstacle to the sustained economic development. The issue of farmers is the focus of the problem, with which the most crucial problem is the too slow increase in farmers' income. With farmers remaining poor, China will never become a rich country.

Farmers not making money

Recently Premier Wen Jiabao made a speech on current economic situation at a meeting attended by leaders of relevant Party and government bodies. During his speech, he said, "If you asked me what is the most difficult problem I am facing, I would say it's still the problem concerning agriculture, rural areas and farmers." This problem is not only related to the increase of farmers' income and expansion of market demand, but also has a bearing on market supply and social stability, he added.

China's economic reform began in the countryside in1978 and did bring tangible benefits to farmers. Since 1997, however, farmers have been facing great difficulty in increasing the money in their pockets, as a result of three main reasons.

First, farmers' income has been increasing very slowly. From 1997 to 2003, in rural areas, the annual growth rate of per-capita net income remained less than 5 percent for a straight seven years, with the lowest only 2.1 percent and highest 4.8 percent, the average of which is only half of that in urban areas.

Second, the gap between urban and rural income has been enlarging over the years. In 1997, the rural per-capita net income was 2,090 yuan (US$252.42) while the urban per-capita disposable income was 5,160 yuan ($623.19), leading to a ratio of 1 to 2.47. In 2003, the gap enlarged to 1 to 3.24, with rural per-capital income standing at 2,622 yuan (US$316.67) and the urban per-capita income at 8,500 yuan (US$1026.57).

Third, those farmers depending only on grain production face even more of a grave challenge. In the past few years, a supply surplus caused a decrease in the price of agricultural products, resulting in decline in the income farmers earned from farm production. In 1997, the average income from farm production was 1,268 yuan (US$153.14). But from 1998 to 2003, the figure was consistently less than that.

Falling income from agricultural production certainly spurs farmers to run to cities for jobs.

Migrating to cities

Wang Zailin, a farmer of Lintao County, Gansu Province, is one of those who are forced to seek employment in cities.

"Farming can only provide us food," he said, "I have two children who go to school, and I have to spend money on chemical fertilizer and daily expense. What can I do other than go out and seek employment?"

Wang went on to give his annual family income statement: Income: some 2,000 yuan (US$241.55) for his work in the city, plus some financial support from his brother who is working in Urumqi, capital of the Xinjiang Uygur Autonomous Region; expense: more than 1,800 yuan (US$217.39) for his son's tuition fee and living expense and some 600 yuan ($72.46) for his younger daughter's education and living. At least 5,000-6,000 yuan (US$603.86-724.64) is needed annually for medicare of senior family members, agricultural investment and daily expenses. As a result, he has had a debt of more than 8,000 yuan ($966.18) over these years.

More than half of the male villagers aged from 18 to 50 have gone out to seek employment in cities, according to Wang, with the income from such work being the main financial support of their families.

Between 2000-02, 47.8 percent in farmers' income increase comes from employment outside their villages.

As a result, during the four years since 2000, the grain production in China has dropped constantly, while less and less land was used for farming. In 2002, only 100 million hectares of farming land were sown to grain crops, 15 million hectares less than that in 1998.

In a market economy, it is now impossible to force farmers to increase agricultural production by government orders. Farmers can only be motivated when they see the profit in growing grains. Therefore, China has to solve the farmers' income problem, even if only to boost grain production and secure grain supply.

Farmers' slow income increase is not only a direct restriction to farmers' purchasing power, but also an obstacle to the domestic market and demand expansion.

It is based on such considerations that the central government comes to the conclusion that the greatest challenge now facing the rural economy is how to increase the income of farmers, especially those living on agricultural production. Therefore, the central government issued its first official document this year on February 8 to address the urgent task of increasing farmers' income.

Farmers hopeful

From this document, and the determination reflected in it, the farmers see a glimmer of hope.

Lin Hejie, a farmer in Jinjiang City, Fujian Province, contracts in 71 hectares of farmland. In 1997, he was the No.1 grain seller to the state in Fujian Province. Commenting on the central government's document, Lin said, it had grasped the most important point in the problem of agriculture, rural area and farmers. He became even more confident when he heard that the new policy would subsidize farmers who sell a large quantity of grains and purchase agricultural machines, saying he would buy some more agricultural machines and contract in more farmland.

Pei Lianggeng, a farmer who used to be unwilling to contract in the farmland in his village, expressed his pleasure when he heard about the new policy for agriculture and farmers. "Now the farmland in the village has been very popular and I am no longer able to contract in as much farmland as before," he said.

In the opinion of Chen Xiwen, deputy office director of the Central Financial and Economic Leading Group of the Communist Party of China (CPC), this document, which has attracted the attention of farmers, points out the basic way to increase the income of farmers and emphasizes the income increase of farmers in grain production areas and poor rural areas.

The document also makes clear relevant policies of promoting rural employment and increasing farmers' income, as well as strategies of expanding the agricultural market, increasing agricultural investment and furthering the rural reform.

According to Chen, it shows an obvious change in China's rural strategy that the main target of rural economy work shifts to the increase of farmers' income.

First, it is a humanitarian function to deal with agriculture and farmer related problems. The basic function of agriculture is to provide society with enough food. But to fully realize this function, society must first secure the economic benefits of farmers. Only when the life of farmers improves can China ensure sustained agricultural development. This document does not order farmers to increase their production; rather, it respects the economic benefits and independence of farmers. It reflects the human touch policy and the requirements in a market economy to do agriculture-related work well.

Second, the document indicates a healthy attitude to government work. Farmers constitute the majority of China's population. Without well-off farmers, there is no way for the whole country to reach real economic prosperity. And the achievements of the government's work are not simply the growth rate of the GDP, or some large and expensive projects. Rather, the government is really successful when all the work can lead to the income increase of farmers and the improvement of their life, which should be the focus of China's modernization.

Zeng Yesong, secretary general of the Research Center of the Problem of Agriculture, Rural Area and Farmers of the Party School of the CPC Central Committee, said for thousands of years China has given agriculture an important role in social and economic life, but with a focus on agricultural tax and production, rather than farmers' benefits. This was a policy of exploiting farmers, instead of benefiting them. The document this time is very different in terms of making farmers' income the priority. For the first time, the document points out that "rural labors seeking employment in cities have become an important part of industrial workers." Emphasizing the career training and fair treatment of farmers employed in cities, the document is the best evidence to show the new way of thinking of China's new leadership.

(Beijing Review February 26, 2004)