A bumper harvest and rising food prices should, in theory, help
narrow the income gap between the urban and rural population. Yet,
a 7-percent increase in farmers' net income this year will not be
enough to stop that gap from widening.
Policymakers who are fixated on high inflation should devote
more efforts to speed up income growth for farmers.
The agricultural authorities announced recently that China would
produce more than 500 billion kg of grain in 2007, the fourth
consecutive year of yield growth. Meanwhile, food prices have
soared 18.2 percent, driving the nation's consumer price index to
an 11 year-high of 6.9 percent in November.
Under such circumstances, it is natural to expect a handsome
rise in farmers' income. But the agricultural authorities' forecast
put farmers' annual per-capita net income growth at only 7
percent.
Such an increase, in itself, continues the momentum of income
growth for farmers. Net income among the rural population rose by
more than 6 percent in each of the past three years, a record since
1985.
Nevertheless, it falls further behind income growth for urban
residents as the later keeps picking up steam. After seeing an
increase of 10.4 percent in real terms after adjusting for
inflation last year, urban per capita disposable income surged 13.2
percent in the first three quarters this year.
The gap in the income growth rates has led a yawning wealth
disparity between urban and rural population. The income of urban
residents in 2006 was 3.28 times that of rural ones, up from 3.22
in 2005 and 3. 21 in 2004. It is a pity that in such a year of
bumper harvests and price gains for farm produce, the urban-rural
income gap has not been narrowed.
The bitter fact highlights the complexity and urgency of the
task to raise farmers' income.
At the annual central rural work conference, the authorities
made it a major task to facilitate a sustained income growth for
farmers next year.
However, given the priority the government has attached to
fighting serious inflation, policymakers will have to weigh very
carefully the benefit of higher grain prices for farmers against
the necessity to rein in overall price hikes.
To raise farmers' real net income, on one hand, the government
may need to provide more fiscal support to better cushion poor
urban families against higher food prices. On the other hand, it
should also take measures to prevent production costs for farming
from rising too fast.
(China Daily December 26, 2007)