This is regarded as a major move following the land reforms of the 1950s, which abolished the centuries-old feudalist land ownership system, and the introduction of the household-based contract responsibility system linking payment to output in the 1980s.

In his report on the Outline of the 10th Five-Year Plan for National Economic and Social Development (2001-05) to the current session of the National People's Congress, Premier Zhu Rongji stressed the foundation role of agriculture in the economy and the importance of increasing farmers' income, saying that these are the primary tasks of economic work for the next five years.

His report was applauded by economists and farmer NPC deputies attending the annual session.

The level of farmers' income has a direct bearing on rural development and stability, said Cai Lifeng, mayor of the major grain producing city of Yiyang in Hunan Province. The new round of rural reform means a major realignment of different interests in the countryside, and it will find an answer to the fundamental problem concerning the long-term stable development of the rural areas, he noted.

In China, with a rural population of 900 million, the issues of farmers, agriculture and the rural economy have always been the top priorities of the government's work. The previous two rounds of rural reform all brought about profound changes in rural areas, enabling the country with only 7 per cent of the world's arable land to feed 22 per cent of the world's population.

Together with the rapid economic growth, problems in agricultural development and the rural economy have become more and more outstanding just as Chen Jiyuan, an economist, predicted. Farmers' income has been dropping for years in a row; the urban-rural income gap is steadily widening; the rural market, with its millions of consumers, has remained dormant, making it impossible to realize the potential of this, the biggest market in the world.

Some places have imposed on farmers the expenses of public utilities and welfare undertakings that should have come from local finances. The heavy burden has put farmers into sharp conflict with local officials, threatening to destabilize the rural social order.

According to official statistics, the annual income of farmers in 1996 increased by 9 percent over the preceding year. But the increase had dropped to 4.3 percent by 1998 and further down to 2 percent by 2000, far lower than the 6.8 percent per capita annual income increase in urban areas. Even in the economically developed coastal Jiangsu Province, 60 percent of the farmers complained about their big drops in income in 2000.

Lu Xueyi, a rural economic expert from the Chinese Academy of Social Sciences, said the waning initiative of farmers in grain production because of declining income has sounded the alarm again on China's grain security. The big drop in grain production in 2000 is an ominous signal, he noted.

The Ninth-Five Year Plan of the Chinese Government admitted that China's population is increasing steadily, but the amount of arable land is decreasing. Water is in short supply and most areas have to make a living at the mercy of nature.

Therefore, great attention should be directed in the new millennium to further securing the food supply for a fifth of the world's population and enable the rural population, which accounts for 80 per cent of the total national population, to become the main power to pushing domestic demand.

The new round of rural reforms is strategic in nature. It involves the introduction of a new grain distribution system featuring State purchase of grain at protective prices and good prices for good quality products, the change in rural financial services, market-oriented production and the change in the taxation and fee collection system.

The reform of the taxation and fee collection system involves the scrapping of all fee collection items by townships and villages and the raising of agricultural tax rates due to be levied by governments at the next level up, thus denying townships and villages the opportunity to collect fees directly from farmers.

Stabilizing rural areas requires institutional reforms, including standardizing government behavior and shifting government functions, said Chen Jiyuan.

His views were shared by many other NPC deputies, who said county and township governmental organs are too bloated, breeding formalism and bureaucracy that have eroded the confidence of the people in the government.

Wang Taihua, Party secretary of Anhui Province and an NPC deputy, said the township finance in Anhui is so overloaded that each township has to support about 300 government workers.

It has been disclosed that the country will cut the number of staff members of governmental organs at county and township levels by 20 per cent, while at the same time central and provincial finance will provide townships and villages with subsidies to make up for their normal shortfalls.

(Xinhua 03/10/2001)