The per capita cash income of China's rural residents increased by 97 yuan (US$11.70) to 834 yuan (US$100.50) during the first quarter of this year, the National Bureau of Statistics said Tuesday.

The increased income represented an actual increase of 9.2 percent from the same period of last year, the bureau said in a statement.

Bureau spokesman Zheng Jingping said that income growth for rural residents has speeded up, due to the central government's efforts in this regard.

For example, the spread of the "tax-for-fees" reform in rural areas has helped reduce the financial burden on them, thus increasing their income.

Per capita taxes and fee burdens for these people dropped 2.2 yuan (27 US cents) or 36.3 percent during the January-March period compared with a year ago.

Rural residents also earned 337 yuan (US$40.60) per capita from non-farming sectors by working in cities and towns, an increase of 37 yuan (US$4.50) or 12.2 percent.

Due to a grain price rise on the domestic market, rural residents earned more income from selling farm products, Zheng said.

Farmers earned 321 yuan (US$38.70) per capita from selling farm products during the period, an increase of 44 yuan (US$5.30) or 16 percent from a year ago.

Experts believe China is expected to witness further grain price rises in coming months, which will further increase rural income levels.

Zhang Xueying, a senior economist with the State Information Center, said there is still room for further price hikes, because grain supplies will continue to fall short of demand.

"It is almost certain that summer grain production will be reduced," Zhang said.

The government, which hopes the price hike could help increase income levels for rural residents, will not intervene in the market with its large grain reserves, he said.

The grain price rises, which started since last October, are continuing on the Chinese market today.

Chen Xiwen, deputy director of the Office of Central Financial Work Leading Group, said there is still room for further and rational price rises.

Grain prices, rising between 10 to 20 percent last year, were still lower than price levels in 1996.

The government should allow the grain prices to resume their rational levels, he said.

The price hikes won't have significant negative impacts on the quality of life for ordinary citizens, so long as the government gives proper support to low-income residents in cities, Chen said.

In fact, per capita spending by urban residents on grain, cooking oil, meat and fresh vegetables dropped 131.2 yuan (US$15.80) in 2001 compared with that in 1996, he said.

Qi Jingmei, another senior economist with the State Information Center, said that grain prices will be kept at a high level this year.

"If rural income levels increase considerably, rural consumption demand is likely to be stimulated," she said.

The slow income growth for rural residents has long been a headache for the central government, because it greatly affects the implementation of the demand-stimulating policy, Qi said.

Chinese rural residents, which account for more than two-thirds of the country's total population, contribute to only one-third of the nation's total consumption.

"The slow income growth will hinder overall economic development and even undermine social stability," she said.

Last year, per capita net income earned by rural residents rose 4.3 percent compared with a year ago to 2,622 yuan (US$315.90), figures from the National Bureau of Statistics indicate.

The growth was much lower than the 9.3 percent income growth rate by urban dwellers.

(China Daily April 28, 2004)