February 2, 2009

 

China's State Council said it will take decisive actions to maintain reasonable rural product prices and prevent farmers' income from being hurt by a downturn in both domestic and global economies.

 

China's government will "decisively prevent a slump in grain production," the State Council said in a statement posted on its Web site Sunday (February 1), adding that the employment situation for farmer workers is "serious".

 

The guidelines, dated December 31, appear to be a final version on a proposal deliberated at the central government's rural working conference in December. A meeting of the Communist Party's Central Committee laid out a long-term rural reform plan in October that failed to give details.

 

Reform of the rural sector has been a critical party plank and a key to China's long-term economic development. State media widely reported that China aimed to double the per-capita income of its rural residents by 2020, based on 2008 levels, boost rural consumption and basically eliminate absolute poverty in rural areas by 2020.

 

China's economic growth slowed to 6.8 percent in the fourth quarter of 2008, marking a seven-year low and sharply down from the 9.0 percent expansion in the third quarter. In 2008, the growth slowed to 9.0 percent from 13 percent in 2007, posing challenge for Beijing to achieve its 8 percent annual growth target for this year, which is needed for creating enough jobs and preventing social unrest.

 

The Cabinet said in its latest statement that it aims to increase subsidies for farmers and raise minimum grain purchase prices further this year while also cutting taxes on agribusiness-related loans as part of effort to boost the development of rural areas.

 

The government will also increase state stockpiles for grain, cotton, edible oil and pork meat, according to the guidelines on rural development approved by the State Council at the end of last year.

 

In addition, the State Council said it will urgently roll out detailed rules about cutting taxes on agribusiness-related loans and loosen restrictions on write-offs for agribusiness-related loans that are overdue.

 

The preferential measures could spur more interest from Chinese lenders, including Agricultural Bank of China Ltd., the biggest state-run rural lender in the country, to issue more rural-related loans.

 

The government will also direct more fixed asset investment to the rural areas and use more treasury bonds to help the countryside development, the statement said, without elaborating.

 

In line with what state media widely reported last year, the Cabinet said China will set up markets to allow farmers to trade the use of their farmland as part of efforts to let farmers boost the scale of their farm production and provide funds for them to start new businesses.