Rural revival more than a numbers game
(Reuters)
Updated: 2006-03-06 22:01

China has promised billions of extra dollars to lift struggling villages into prosperity, but it will take more than money to ensure that poor farmers benefit, analysts said on Monday.

Chinese Premier Wen Jiabao told the national parliament on Sunday his government would invest at least 339.7 billion yuan ($42.3 billion) in the countryside this year -- about 453 yuan each for China's 750 million or so rural residents -- with regular increases in coming years.

Many said that achieving the government's plans for rural revival would hinge on far-reaching reform of rural government, cutting the number of farmers, and stringent measures to reduce corruption.

"Beijing is becoming like a massive aid donor," said Stephen Green, senior economist for Standard Chartered Bank in China. "It will face exactly the same problems as the World Bank faces aiding Third World countries."

The additional spending on the countryside will go to reducing school fees, improving healthcare, cutting local government staffing and debts, and raising agricultural productivity, the government said.

DEPENDENCY

But officials and analysts said such programmes may fail, or entrap farmers in "welfare dependency", unless China reduces its overall rural population.

"The solution to China's rural problems isn't in fact in the countryside. The priority should be helping farmers move to cities," said Mao Yushi, a well-known economist who favours market reforms.

Farmers now make up about two thirds of China's 1.3 billion people, and that proportion has been shrinking at about 1 percent a year, he said. "It's possible to accelerate that rate by giving farmers better education, training and rights," he said.

"Local government needs to be transformed," said Xu Yong, the director of the Centre for Chinese Rural Studies at Central China Normal University in Wuhan, central China.