RURAL WOES: The Chinese Government has doubled its efforts in recent years to narrow the urban-rural income gap

Bridging the urban-rural gap seems like a mission impossible for China. The income disparity between its rural and city residents has been continuing to widen despite stiff government efforts to narrow it.

The per-capita net income of the country's rural residents reached 4,140 yuan ($610) last year, rising 9.5 percent compared to 2006 - the highest growth rate since 1985, according to a Ministry of Agriculture report. But during the same period the per-capita income of urban residents grew even faster to 3.33 times that of rural residents for a difference of 9,646 yuan ($1,411), creating the largest gap in three decades, the report said.

But the problem cannot be blamed on the government, which has tried to improve the situation for rural residents by suspending the agricultural tax, creating subsidies for an array of agricultural products, and putting in place protective measures for rural migrant workers. Besides this, central finance has increased its general spending on agriculture, the countryside and farmers by 38 percent this year to 595.6 billion yuan ($87.1 billion). Of this amount, subsidies for farmers have doubled to 102.86 billion yuan ($15.05 billion).

So what is holding back the narrowing of the income gap between rural and urban residents?

Sun Zhengcai, Minister of Agriculture, said in the report that the country's entrenched social system barriers were to blame. The rigid household registration system prevents the free movement of rural workers into cities, and the national resource allocation system favors urban areas over the countryside. As a result, the income growth rate of farmers has fallen well below that of urban residents in recent years.

According to an article in Outlook Weekly magazine under the Xinhua News Agency on September 8, the per-capita disposable income of urban residents climbed 7.7, 9.6, 10.4 and 12.2 percent each year between 2004 to 2007, 0.9, 3.4, 3 and 2.7 percentage points higher, respectively, than that of rural residents during those same years.

Cheng Ruihua, an analyst with the Financial News, echoed Sun's opinion, saying that the countryside has fallen behind in development, because the government has focused primarily on developing and expanding cities and industries. Since the introduction of the opening-up and reform policy 30 years ago, the country's economic reorganization has centered on state-owned enterprises and left rural social barriers almost untouched. These imbalances between urban and rural areas would continue to hamper the countryside's development, Cheng said.

Besides this, the big increase in farmers' incomes may fizzle out because of uncertainties hanging over the country's agricultural production, Sun said. Cost inflation jitters are likely to erase the agricultural gains, he said.

Surges in the prices of global commodities have pushed up the costs of domestic agricultural production. Based on current prices, the cost of grain production per mu (666.7 square meters) has increased by 60 yuan ($8.8) this year. The cost of livestock breeding also is increasing because of soaring feed prices.

Rural migrant workers also have been taking a hit on the employment front. Many export-oriented enterprises in coastal east China have been cutting jobs and paring down their production to offset the impact of cost inflation. According to the National Bureau of Statistics, the total number of the country's rural migrant workers in the first half of this year grew 5.8 percent year on year, 2.3 percentage points lower than the same period last year. Analysts say this will make a dent in farmers' total income, a big portion of which comes from migrant workers.

Big natural disasters that dealt a blow to the agricultural sector this year also have hurt rural income levels, Sun said. The Ministry of Agriculture estimates the direct economic loss to agriculture caused by the snowstorm early this year at around 94 billion yuan ($13.8 billion). Worse still, the overwhelming Sichuan earthquake in May devastated more than 110,000 hectares of farmland, damaged 320,000 hectares of crops, and caused in excess of 40 billion yuan ($5.9 billion) in direct economic losses in the hardest-hit areas.

In sharp contrast to the bleak outlook for farmers, the income of urban residents is heading for steady growth. This would further add to difficulties in reducing the urban-rural divide, Sun said.

Economists believe that only the removal of the social system barriers can help reverse the further widening of the urban-rural income gap. Some government departments and research institutions have made initial probes into the future reform of the rural system. In late August, the State Council gave a report on promoting farmers' income to the Standing Committee of the National People's Congress. Earlier this month, the National Committee of the Chinese People's Political Consultative Conference held a conference on integrating the development of the country's rural and urban economies.

Analysts say all these moves are good preparations for system reform in the countryside. Li Yining, a renowned economist, said at the conference that the government would make it a priority to remove the social barriers that choke rural development by economically integrating urban and rural areas in the future.