The story serves as a reminder of even serious problems ahead and sounds the alarm that there are yet still harder nuts to crack in reform.

China's economic reforms first started in rural areas, bringing great benefits to the rural folks. But as they spread to cities, all eyes were focused on reforms in finance, foreign trade, foreign exchange, planning, investment, price, good distribution, housing, social security and government agencies ..., shaping up an embryo form of a socialist market economy, thus winning worldwide acclamation.

But, as reforms deepen, it would inevitably touch the tender points of interests and power pattern of the society, without which what has been achieved would be cast into the winds.

While more and more city reform beneficiaries have found themselves increasingly affordable to private cars, their rural folks feel betrayed: their income remaining static and even diminished, even without the money to pay the ways of their children to school; stocks held by the state have become a headache on the stock market, which falls at once upon the tips that state stocks are out for transfer; SMEs complain about reluctance of banks to part with loans while banks are troubled with their non-performing loans; non-governmental capital has grown in strength, but it has been troubled by a web of restrictions, without knowing where to invest; the state has to issue a tremendous amount of treasury bonds to put a shot in the arms of the economy; and above all, reform of state-owned enterprises has thrown hundreds of thousands of workers out of work and the fledgling social security system still lacks the strength to cover them all.

What worth special note is the fact that after becoming a WTO member China has to abide by WTO rules and throw itself into unprecedented international competition and that has made it more urgent to ease the conflict of interests in the deeper layer of the social development.

Topping the list of problems to be resolved is rural development, which is essential if China is to achieve the goal of building a well-off society.

It is not a far-fetched objective for economically developed areas and cities where the average disposable income per person has reached 7,703 yuan. But for the vast rural areas that feed more than 60 percent of the population, it would be a tall order as the current per capita income averaged only 2,476 yuan and there are still 28 million people struggling in poverty. It is easy to increase grain output. But when it comes to income, which grows barely at half the speed as in cities, it would be quite another story.

Although the word "Planning" has disappeared in the former State Development Planning Commission and the word "Reform" has slipped in instead, according to the latest government revamping plan, it does not necessarily mean that China has completed its market-oriented transition. The old system dies hard. Many of the problems that have surfaced are associated with the old system.

In his government work report, the outgoing Premier Zhu Rongji urged resolute steps to carry out strategic adjustment of the economic structure as dictated by the changes in the current stage of economic development.

In their panel discussions over the past few days, deputies to the NPC and members of the CPPCC have offered many prescriptions or remedies, such as the abandoning of the dual urban-rural economic structure and the household registration system, and correction of the bias in education investment.

Chen Qingtai, deputy director of the Development Research Center under the State Council and member of the CPPCC, deems it essential to provide enterprises with incentives institutionally, with state capital to concentrate on industries concerning state security, natural monopoly industries and industries providing public good and high and new technologies.

Through the successful reform over the past 20 years, the government has exhibited its ability of macro-economic control and won the popular trust, economists say. And it needs all the more popular support when it comes to crack the harder nuts to come in its reform efforts.

(Xinhua News Agency March 14, 2003)