Rural migrant workers were the hardest hit, with incomes dropping by 26.5 per cent year on year in the second quarter. Migrant workers in the cities accounted for more than a third of rural income last year.

Of the 120 million migrant workers employed in cities, about 20 per cent returned home to escape Sars in April. Many of those who stayed lost their jobs because of a slowdown in tourism and other urban service industries. Hundreds of thousands of restaurants, hotels, travel agencies and public transport businesses shut down during the outbreak.

The growth in the average income of families in the countryside, which include migrant workers, was halved in January-June compared with the same period last year. Their average income rose to 1,158 yuan a month in the first half - up 3.2 per cent year on year. For the first half of last year, their income rose by 6.6 per cent from the same period in 2001.

'The growth for all major income resources was obviously slowed down,' said the report, which was based on a survey of 68,000 rural households.

Sars also affected other rural industries during the same period.

Revenue from transport-related businesses fell 19 per cent, largely because migrant workers returned home and stayed there amid the Sars crisis.

Retail, restaurant and wholesale business revenues in rural areas were almost halved.

The report largely confirmed economists' warnings that rural areas would get a major economic hit from Sars.

Zhang Xiaoshan, director of rural development research under the Chinese Academy of Social Sciences, has said that Sars could further widen the growing wealth gap between those in the cities and those in the countryside.

Rural incomes are already growing at less than half the pace of those in urban areas.

The government wants to narrow the wealth gap and has targeted a rural income growth rate of 4 per cent this year. But Sars may have made that goal hard to achieve.

Cities have placed much stricter restrictions on hiring migrant workers and have tightened residential rules, making it more difficult for labourers to find accommodation. Disruption to urban services may also reduce demand for migrant labour.

Economists have urged the government to relieve the financial burden of rural residents, especially farmers, such as by cutting agricultural tax, providing more economic stimulus to rural areas and overhauling public finances.

Only people living in urban areas are entitled to social welfare, while those in the countryside must pay for their own education and other services.