China shifts focus to poor with 'New Deal'
(AP)
Updated: 2006-03-11 09:58

China's consumer spending boom is largely limited to the cities. Rural families save whatever little they have for education and doctor bills.

The government is raising spending on subsidies and other support for farmers by 11 percent to 339.7 billion yuan (US$42 billion;euro35 billion) this year.

It is eliminating farm taxes and waiving school fees for rural families, with 218.2 billion yuan (US$27 billion; euro22 billion) in increased support for compulsory education, through grade nine, over the next five years.

Some 20 billion yuan (US$2.5 billion; euro2 billion) in new spending is earmarked for upgrading and building hospitals by 2010. Another 4.2 billion yuan (US$500 million; euro420 million) will be spent increasing government support for rural health insurance programs.

Trial versions of those initiatives have been put in place in some regions, such as the remote western region of Ningxia.

Rural incomes there are only a third of the levels earned by farmers in more affluent eastern provinces.

But annual economic growth in Ningxia jumped to nearly 20 percent in 2004 after the government boosted spending on roads, social programs, subsidies for raising grain and livestock and other programs, says Stephen Green, senior economist for Standard Chartered Bank in Shanghai.

A report by Green dubbed the region's transformation "Ningxia-nomics."

But such costly programs don't address other basic rural problems, such as policies that bar rural workers from moving to cities to find higher-paying jobs.

A key source of rural unrest is the seizure of farmland by local officials who sell it at a profit to developers to build shopping malls, factories and other projects.

Thousands of protests have erupted over complaints that farmers are paid too little.

Officials promised this week to rein in land seizures.

"We will adopt a very strict approval system for land use to eliminate the unauthorized expropriation of land," said Yin Chengjie, a deputy agriculture minister, at a news conference.