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The living standards of Chinese people have greatly upgraded since the nation began its reform and opening-up drive more than two decades ago. However, statistics show that there is a big income gap between urban and rural populations and the disparities are still growing. In order to achieve a more balanced economy, the State should take urgent measures to provide more opportunities for farmers to catch up with their city counterparts.
First, broad agricultural tax reform is needed. The reform should adopt the "tax for fee" method to set up a uniform taxation system to avoid random and excessive fee collection imposed on farmers.
There are still price discrepancies between industrial and agricultural products nowadays, putting farmers at a disadvantage -- agricultural produce prices have been kept too low compared to the prices of such inputs as fertilizer and agricultural machinery.
Farmers already face a heavier tax burden than city dwellers. According to statistics from the State Council's tax reform office, farmers in 1998 paid a total of 122.4 billion yuan (US$14.7 billion) in agricultural tax, value-added tax, specialty tax, slaughter tax, education and other collective fees, as well as local administrative fees. The old system should be reformed to relieve farmers of the onerous burden.
Second, the State should further reform the household registration system to facilitate farmers to move to and work in cities and grant them social welfare. Their rights to employment, education and social security should be safeguarded.
To modernize rural areas, the government should support the migration of rural workers into non-agricultural sectors.
Third, equal employment rights and job opportunities should be granted to rural laborers.
Official statistics showed there were 88 million migrant workers from rural areas in 2001, but latest figures indicate a total of 120 million.
Phasing out discriminatory policies against migrant workers in cities and granting equal schooling opportunities for their children and health insurance for their families, could lead gradually to a unified, open labor market.
China's urban development would also get a boost by absorbing the surplus rural labor force. And the movement of surplus labor would help the rural economy, pushing up farmers' earnings.
Fourth, farmers' rights to use their contracted land should be protected according to law so that they can make long-term investments and cultivate their lots. They should be allowed to buy and sell the land use rights, provided that they are not sold under value.
Fifth, the government should increase investment to provide education subsidies, health and pension benefits as well as minimum subsistence support in rural areas.
Education is compulsory between the ages of 6 and 15, but rural education does not enjoy government subsidies as in the cities, so farmers pay more money for their children's education.
At the same time, many rural laborers are deprived of social security -- especially those rural workers who are employed in non-agricultural sectors. While urban retirees can be sure that their pension will reach at least a national minimum level -- if it does not, the central government will make up the missing amount -- farmers are excluded from this entitlement.
It is high time to extend age pension and medical insurance systems to the rural population, combining State funds with individual contributions. Meanwhile, the provision of a minimum subsistence allowance for farmers should be combined with poverty alleviation policies in rural areas.
Finally, the establishment of farmers' organizations is a pressing task.
Farmers should develop voluntary guilds. These guilds should coordinate the farmers' marketing and purchasing activities, thereby decreasing the risk of price fluctuations and lowering transaction costs.
Based on the same principle as self-governing villages, farmers' associations at various levels could protect their members' interests.
The author is executive president of the Hainan-based China Institute for Reform and Development.
(China Daily February 20, 2003)
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