The central government will increase its budget for investment in rural areas by more than 100 billion yuan ($13.9 billion) this year, a top official in charge of rural programs said.

The increase will bring the government's investment pool for the countryside to more than 520 billion yuan this year, Chen Xiwen, director of the office of the central leading group on rural work, wrote in his recently released new year working report.

The funds will pay for the construction of infrastructure projects for water, gas and electricity, as well as agricultural technology, among other projects, Chen said.

Investments in education and medical services and subsidies for low-income families are also on tap. However, the final budget will be decided at the national congress to be convened early in March, Chen said.

The government increased its budget for rural areas by 80 billion yuan last year, which was a record-high increase at the time, he said. After decades of supporting urban development at the expense of the countryside, the authorities have begun to address the gap between urban and rural incomes.

The government cancelled a two-millennia-old grain tax in 2006, removed other arbitrary fees and reinstated free grammar school education. But the infrastructure needed to support agriculture production is still strained, Chen said. More than 30,000 of China's 87,000 dams are unstable, he said.

Rural development has become one of the central government's top concerns in recent years, with every NO 1 document - the first document approved by the central leadership every year - focusing on rural issues since 2003.

But, Chen said, the country still needs permanent mechanisms for promoting agriculture and for urban areas to help rural areas. A recent survey put the agriculture-based population at around 700 million.

The country has launched a countryside campaign, diverting huge amounts of funds to it every year. But some experts say investment in rural infrastructure construction could lead to big losses as more peasants move to cities.

"While addressing problems in the countryside, we cannot be so near-sighted. We should take the whole urbanization process into consideration while making plans," Yang Jinhai, secretary-general of the Central Compilation and Translation Bureau, a think tank, said.

He said that in some areas, between 50 percent and 70 percent of the population has already left for cities.

"A lot of them never go back, and in the second generation, even less so. In the cities, they have no housing, the situation is a mess, and there is no policy that helps them."

(China Daily, Xinhua News Agency February 12, 2008)