In 2006, great progress was achieved in infrastructure construction and various social undertakings in rural areas. New types of cooperative medicare have been introduced to 40 percent of counties and districts nationwide with input of 4.73 billion yuan from the central budget, 8 times the figure in the previous year. In terms of compulsory education in rural areas, tuition and miscellaneous fees of primary and junior middle school students in the western region are exempted and accommodation allowance is granted to students from poor families, benefiting 48 million primary and junior middle school students in the region.

Difficulties emerge

In 2006, Ye Jingzhong, a professor at the College of Humanities and Development of China Agricultural University, spent eight months visiting most rural villages in Jiangsu, Hunan, Hebei and Gansu provinces and completed a report entitled "Research on Construction of a New Countryside With the Perspective of Farmers."

According to Ye, a shortage of funds is the biggest difficulty to most farmers.

"In agricultural production, 66.5 percent of rural households are short of funds and in bad need of help, and 29.7 percent of them hope the government can give credit support for production," said Ye in his report.

Meanwhile, credit needs for farmers' lives are even higher than that for production, including education, health care and house building.

In Ye's opinion, in some rural areas, the construction that is being undertaken is not what farmers desire.

For example, in some places, villages are decorated with lights and greened, roads are covered with cement and houses are whitewashed. However, farmers deem that the most urgent thing is to upgrade garbage disposal and rebuild kitchens, livestock pens and toilets.

This coincides with worries of scholars. Last year when the policy of building a new countryside was first initiated, some scholars and media feared that that it could lead removing old villages to construct new ones with taller buildings. According to Ye's report, perhaps because of this worry, of the 6 million villages all over the country, less than 6,000 really began new construction.

Convincing farmers of the desirability of certain changes is also a challenge.

"For instance, in order to protect water resources and promote ecological balance, it is ideal to pave roads with sandstone instead of cement, but farmers prefer cement instead of sandstone for the convenience of driving. We also suggest building sewage disposal facilities to protect drinking water and maintain soil health, but farmers believe sewage can naturally seep," Ye said.

More measures

On February 25, the China Banking Regulatory Commission (CBRC) approved establishment of five new rural banking financial institutions in the provinces of Sichuan, Jilin and Qinghai.

This is a new rural financial pattern adopted by the Chinese Government to solve difficulties of financing in rural areas. On December 20, 2006, the CBRC released a circular encouraging various types of capital to set up rural banks and decided to carry out experimentation in Sichuan and four other provinces and the Inner Mongolia Autonomous Region.

Establishment of rural banks can meet the growing demand of financial services in rural areas and solve the financing difficulty of farmers step by step.

The No. 1 Document issued early this year stipulates that comprehensive rural reform involves reform not only in the economic field, but also in political, social and cultural spheres. It is a significant institutional innovation and social transformation.