Statistics from the National Bureau of Statistics released Tuesday indicate that the per capita cash income of Chinese farmers reached 1,063 yuan (US$128) during the first half of this year, an increase of only 4.2 percent from the same period last year.

"The growth rate of per capita net income should be even lower, as the previously-mentioned cash income includes agricultural costs," said Chen Xiwen, a think-tank expert with the Development Research Centre under the State Council.

An earlier report from the Ministry of Agriculture said that China will increase farmers' net incomes by an average annual rate of 5 percent during the 10th Five-Year Plan period (2001-05).

"The country is facing a hard time ahead," Chen said. "The work for the remaining months of this year will be arduous."

According to Chen, the growth of farmers' incomes will greatly affect the implementation of the government's demand-stimulating policy, as 800 million farmers form a huge rural market vital to the country's domestic demand.

"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.

"A slowdown in the income increase will hinder overall economic development and even undermine social stability," Chen said.

Shen Laiyun, an official with the National Bureau of Statistics, said that Chinese farmers need to readjust agricultural and rural industrial structures to increase their income.

"Accelerating farm produce processing will also contribute to the added value of the agricultural sector, thus benefiting the wallets of farmers," Sheng said.

Meanwhile, the country should increase investment in the application and dissemination of advanced agricultural technologies, he said.

China also needs to simplify its administrative structure in rural areas, and eliminate random and irrational fees that are often imposed on farmers, according to Chen Xiwen.

"Institutional reform is the key to increasing farmers' incomes and reducing their financial burdens," Chen said, adding that 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.

Other measures, such as the tax-for-fee system (which replaces various agricultural fees with an income tax), also need to be put into play.

"The Chinese Government should encourage farmers to leave rural areas, as farmland in China can not accommodate so many farmers," Chen said. "More farmers should turn to non-farm work to seek their fortune."

In this case, China should prioritize the development of township businesses and the expansion of small towns, creating more job opportunities for farmers and accelerating the resettlement of redundant rural.

(China Daily 07/18/2001)