"This means the growth in farmers' per capita income has begun to pick up after several years of decline," a spokesman with the bureau said.

He added the farmers' per capita income rose a year-on-year 2.1 per cent to 2,253 yuan (US$271) in 2000.

But the growth in rural incomes is still lower than the 8.5 per cent growth achieved by urban residents, which stood at 6,860 yuan (US$827) per capita in 2001, the spokesman said.

Also on Tuesday, Premier Zhu Rongji said in his government's work report delivered at the opening of the annual session of the National People's Congress that developing the agricultural productive forces and raising farmers' purchasing power are an important aspect of the effort to stimulate domestic demand.

An increase in farmers' income and reduction in their burden will be important criteria for judging the agricultural and rural work, he said.

Xie Yang, a senior researcher with the Development Research Centre under the State Council, said the slow growth of farmers' income has long been a headache for the government.

"If consumption in rural areas cannot be stimulated, the full expansion of domestic demand, a strong engine for economic growth, will not be realized," he said..

Slow income growth will hinder overall economic development and even undermine social stability, he said.

The government should further spread the "tax-for-fees" reform to reduce farmers' financial burden, said Ni Hongri, another senior researcher with the centre.

Ni said the reform -- which is now being carried out in more than 10 provinces, municipalities and autonomous regions -- is aimed at reducing farmers' tax burdens by abolishing assorted fees and charges, thus increasing these people's income.

On the other hand, the government needs to encourage farmers to adjust the agricultural structure.

The government also needs to simplify the administrative structure in rural areas, Xie said.

"Institutional reform is the key to increasing farmers' income and reducing their financial burdens," he said.

He added the reform should include the removal of township governments, giving farmers a bigger say in managing village affairs, invigorating county economies and cutting the size of government institutions in rural areas by a large margin.

"The government should encourage farmers to leave, as farmland in China cannot accommodate so many farmers," Xie said.

(China Daily March 7, 2002)