Liu Jinhuan, a 48-year-old farmer in Yuexi County in east
China's Anhui Province, suffered from rheumatic heart
disease that hampered her normal work for many years. She could not
get proper treatment because she couldn't afford it.
Early last year, she joined the rural cooperative medical
program, which was launched in 2003 and covered about 8 million
farmers in Anhui. Under the program, she paid an annual 10 yuan
(US$1.25), and the central and the local governments each allocated
a similar amount per year for every participant.
Last February, Liu had heart surgery in Hefei, the provincial
capital, and fully recovered weeks later.
One-third of her US$3,800 medical bill was reimbursed by the
cooperative medical care fund. The rest came from family savings,
the largesse of friends and relatives, and borrowings.
"The cooperative medical care program saved my life," said Liu,
whose family's net income is about US$300 per year. "I hope this
good policy will continue forever."
Liu is one of the millions to benefit from a nascent but
developing welfare network.
The Ministry of Finance's guiding principle in this year's
budget was "guaranteeing support for public expenditures while
reducing general expenditures." It promised to give high priority
to "weak links" in economic and social development such as
agriculture, education, employment, social security and public
health.
Backing the promise is big money. For example, the ministry has
allocated 186 billion yuan (US$23.25 billion) for social security
allowances and reemployment programs, a 14.5-percent increase from
last year. Local governments are also required to increase their
budgets in these areas.
"The priority of the national treasury is noticeably shifting
from direct investment to public service," said Zheng Gongcheng, a
professor at the School of Labor Relations and Human Resources of
Renmin University in Beijing.
"It is a fundamental job for an administration to provide public
service. A service-oriented treasury is in line with the
government's responsibility of providing welfare to citizens."
Since 1998, China has adopted a proactive fiscal policy
featuring the massive issuance of treasury bonds that were largely
used in infrastructure construction, which helps propel the gross
domestic product. The spectacular growth, however, has been coupled
with inadequate expenditure in education, healthcare and other
social programs.
"The incomplete social security system has clogged consumption
as many people have had to tighten their purse strings and save as
much as possible in case of rainy days," Zheng said.
Sluggish private consumption adds to the economy's reliance on
resource-guzzling fixed-asset investment and massive exports, which
have become politically sensitive issues amid fusses over China's
trade surplus as well as a surge of anti-dumping charges, Zheng
noted.
"Farmers and the urban working class are the biggest source of
potential consumption," he said. "Improving social security,
education and healthcare will help tap that potential."
At the end of 2004, the central government halted its proactive
policy in favor of a steadier line. Statistics from the Ministry of
Finance indicate the national budget deficit for 2005 dropped to
300 billion yuan (US$37.3 billion) 19.2 billion yuan (US$2.3
billion) lower than for 2004, while expenditures on education,
social security and public health all posted double-digit
growth.
This year the treasury has projected an increase in spending on
public welfare, particularly in rural areas. It has allocated 339.7
billion yuan (US$42.3 billion) for rural development, a growth of
42.2 billion yuan (US$5.2 billion), or 14.2 percent, year-on-year.
By comparison, the growth in the central government's overall
budget this year over 2004 is 9.7 percent.
The central government plans to waive the tuition fees in rural
primary and junior middle schools in 12 western provinces this year
and ensure free compulsory education to rural areas nationwide in
2007. Nine-year free compulsory education is mandated in China's
laws, but insufficient funding in some places had led to backpay to
teachers and ad hoc charges to students.
The Ministry of Finance has projected 218.2 billion yuan (US$27
billion) of treasury expenditure in the next five years for rural
compulsory education, which will benefit about 160 million
children.
The central government also plans to extend the rural
cooperative medical care network to 40 percent of counties in the
country this year from the 23.5 percent at present, and to all
counties by 2008.
Meanwhile, central and local treasury per-person subsidies to
the program will both double to 20 yuan (US$2.50) this year. The
national treasury alone has earmarked 4.73 billion yuan (US$583
million) more than eight times the expenditure last year for the
expansion.
The central government also released a new decree that took
effect in March, stipulating that local governments guarantee basic
living conditions of rural orphans, widows and the disabled, which
used to be taken care of by rural communities.
"This new policy relates to just a small number of rural
residents, but it's quite symbolic in that government-financed
social security is starting to extend from cities to rural areas,"
said Yu Jianrong, a senior researcher with the Rural Development
Institute of the Chinese Academy of Social Sciences.
"Undoubtedly the public welfare rural residents enjoy remains at
a very low level," Yu said. "But the encouraging thing is that the
government is taking steps to improve it in a down-to-earth
manner."
The increased input in public welfare is backed by solid growth
in tax revenue. National revenue reached 3.16 trillion yuan (US$393
billion) in 2005, up 19.8 percent from 2004 and double the level in
2001.
"Improving public welfare has always been the administration's
main objective, and now its financial strength is much greater,
that solidifies its motivation to provide more and better service
to the public," Yu said.
The government has promised to ensure that 100 million rural
residents get safe drinking water, build or renew 1.2 million
kilometers of rural roads and furnish 3.5 million more rural
residents with access to electricity.
"One main cause of the backwardness in rural areas is poor
infrastructure, including transport, power and water supply and
telecommunication service," said Ding Jianchen, a professor of
finance with the University of International Business and
Economics.
"Improving the infrastructure will help lower rural people's
cost of living and development and, therefore, contribute to their
well-being."
(China Daily April 14, 2006)