Income growth by China's 800 million rural people will remain stable next year, economists said, but the growth rate will drop compared to this year.

Xie Yang, a senior researcher with the State Council Development Research Center, said the government will continue to increase policy support for development of agriculture and rural areas, as well as rural people's income growth next year.

"This will play an important role in rural people's income growth," he said.

Finance Minister Jin Renqing said on Tuesday the government will beef up financial support to improve agriculture sector's production capacity, promote grain production and effectiveness of agriculture, and to increase rural people's income next year.

"The government will continue to deepen tax and fees reform in rural areas," he said.

Agriculture tax will be further reduced next year, he said.

Direct subsidies for grain producers, which stood at 10 billion yuan (US$1.2 billion) in the country's major grain production areas, will not be reduced, he said.

The central and local governments will also increase investment in rural infrastructure construction, ecological construction, agriculture science, comprehensive agriculture development and poverty reduction development.

The compulsory education system in rural areas will also be improved, he said.

Qi Jingmei, a senior economist with the State Information Centre, said policy factors would continue to be favorable for rural people's income growth.

However, rural people can not expect to maintain such a high income growth as witnessed this year.

Rural people's income grew a year-on-year 11.4 per cent during the first three quarters of this year, backed by policy support and rising grain prices.

"But grain prices will not rise that much next year, since they are already very high," Qi said.

Xie said grain prices could even drop next year.

Rural people's income from selling farm produce accounted for more than 45 per cent of their total income during the first three quarters of this year.

Xu Jun, who lives in the countryside in Shuyang County in East China's Jiangsu Province, said he was confident his family would benefit from the government's favorable policies.

But the relatively higher temperature in winter this year meant added worries for him.

"I'm not sure whether we can enjoy a bumper harvest next year, because the high temperature will do harm to winter wheat growth," he said.

But Peng Longyun, a senior economist with the Asian Development Bank, said China is capable of maintaining strong income growth for its rural people.

"While continuing to take measures to increase rural people's income, the government might take further measures to reduce rural people's financial burden," he said.

The government may exempt all fees relative to rural education in some areas.

It may also establish a basic guarantee system in the rural areas to ensure basic lives for the poorest people, he said.

The slow income growth of rural people has had a great impact on the country's overall consumption demand one of the three engines for the country's economic growth during the past years.

The government also worries that slow income growth will cast a shadow on social stability.

The government has paid special attention to the issue, she said.

The government's efforts to help rural people be paid delayed salaries during their work in cities was a clear indication, she said.

(China Daily December 27, 2004)