China warns of slower income growth in rural areas

BEIJING (Reuters) - Income growth in rural China will slow this year as farms struggle to absorb millions of workers laid off from factories hit by the global financial crisis, officials said on Wednesday.

A local resident herds sheep and yaks to another pasture in Bole, Xinjiang Uygur Autonomous Region March 14, 2009. REUTERS/China Daily

Despite government efforts to narrow the gap between urban and rural incomes, farmers’ incomes -- on average 4,761 yuan last year -- have slipped farther and farther behind those of city dwellers.

Farmers’ incomes are expected to grow 6 percent in 2009, down from 8 percent last year, according to a green book on rural China released on Wednesday by the National Bureau of Statistics and the Chinese Academy of Social Sciences.

“China’s agriculture industry is probably confronting its most severe challenge over the past 30 years,” said Zhang Hongyu, director of policy and law division at the Ministry of Agriculture.

Falling exports of agricultural products and rising unemployment of migrant workers will combine to weigh on rural income growth in 2009, Zhang said at a forum.

The National Bureau of Statistics estimated last month that the number of unemployed migrant workers had reached 23 million.

About 130 million rural Chinese travel to cities every year to work in factories, in restaurants and on construction sites, but many have been forced back to the countryside with the country’s export sector in a tailspin and the real estate market also faring poorly.

The government has earmarked 370 billion yuan of its 4 trillion yuan stimulus package announced last November for investment in rural facilities and infrastructure.

It has also given rural citizens a range of subsidies to encourage them to buy home appliances and electronics, from washing machines to mobile phones.

Han Jun, chief agricultural researcher in the Development Research Center, a think-tank under the cabinet, said the government should spend more to raise the minimum purchasing prices for grains.

“In stead of simply giving farmers incentives to boost rural consumption, the government needs further efforts to guarantee their income growth first,” he said.

City dwellers’ average incomes are now 3.31 times those of the average for the country’s roughly 740 million farmers, compared with 2.47 times in 1997.

Reporting by Aileen Wang and Simon Rabinovitch, editing by Dayan Candappa