China will increase the number of treasury bonds by 3.25 billion yuan (US$394 million) in a move to boost investment in infrastructure construction in rural areas over the next six months.

The new effort, designed to counter the negative impact of SARS, was revealed at yesterday's executive meeting of the State Council chaired by Premier Wen Jiabao.

The treasury bonds will be used to bolster funding for construction of electric power, roads, drinking water projects and rebuilding of dilapidated school buildings in rural areas, particularly those in the poorest regions.

The move will have a two-fold positive impact in that the building programme will provide work and an income for many rural laborers in addition to vastly improving infrastructure.

The government should concertedly implement various measures to increase farmers' income, one of top priorities on government's agenda, the meeting concluded.

These measures include increasing investment in agriculture and rural areas, and conducting supply and marketing system reform, financial system reform, "fees-for-tax" reform and medical reform, as well as establishing a contingency handling mechanism.

Vice-Premier Huang Ju told yesterday's opening ceremony of the Second Meeting of the Standing Committee of the 10th National Committee of the Chinese People's Political Consultative Conference (CPPCC) that China faces a tough task if it is to meet this year's goal of increasing farmers' income by 5 percent.

The SARS outbreak resulted in 8 million migrant workers returning to their homes in the countryside during the crisis.

In the last year, income earned by farmers from working in cities accounted for about 41.8 percent of the total annual increase in income, said Huang.

During the second quarter of this year, the per capita cash income of farmers decreased 35 yuan (US$4.25), 4.5 percent down compared to the same period last year, according to official statistics.

To reverse this, experts called for more favorable policies.

The government should consider cutting agricultural taxes in rural areas that recorded massive numbers of migrant workers returning from cities for fear of SARS, said Han Jun, a senior expert with the State Council Development Research Center.

Such taxes should be reduced by a large margin, especially for regions which have been detrimentally affected by both SARS and summer floods, such as East China's Anhui Province, he said.

Despite this, Huang said in his speech that he was confident China will achieve its economic growth target in 2003.

Huang said although SARS has had a certain negative impact on the development of China's economy, the momentum of China's economic development remains strong.

(China Daily July 9, 2003)