Economic growth in rural areas still slower than urban regions

PUBLISHED : Saturday, 21 April, 2007, 12:00am
UPDATED : Saturday, 21 April, 2007, 12:00am

The mainland's rural areas still lag far behind urban areas in economic growth and face intense inflationary pressure despite government efforts, including earmarking in recent years huge funds to help farmers, according to the latest National Statistics Bureau data.

The consumer price index released yesterday shows urban areas have seen a much faster growth rate than rural regions. The bureau provided figures by category yesterday after it announced first-quarter main economic data on Thursday.

The consumer price index rose 3.6 per cent in rural areas last month against the same period last year, while the urban CPI index rose 3.1 per cent, though both exceeded the central government's target of 3 per cent for this year and are likely to herald another interest rate rise.

Consumer prices in rural areas grew 3.1 per cent in the first quarter, compared with 2.5 per cent in cities - meaning farmers may have to pay more for consumer goods although their income is a fraction of that of their urban counterparts.

The government said on Thursday that nationwide CPI rose 3.3 per cent last month, and 2.7 per cent in the first quarter, from a year earlier.

The statistics bureau said yesterday that prices of food rose 7.7 per cent last month from a year earlier, and non-food items rose 1.1 per cent.

It also gave a breakdown of the producer price index (PPI), after it said on Thursday that it was up 2.7 per cent last month and 2.9 per cent in the first quarter. The PPI for agricultural products grew 7.3 per cent while industrial products rose 2.9 per cent in the first quarter.

Urban retail sales rose 15.5 per cent in the first three months of this year to 1.433 trillion yuan, while rural retail sales grew 13.7 per cent to 685.5 billion yuan. Nationwide, retail sales rose 14.9 per cent from a year earlier to 2.119 trillion yuan.

Rural fixed-asset investment grew 16.7 per cent in the first quarter from a year earlier, slower than the 25.3 per cent growth of urban fixed-asset investment and the national average of 23.7 per cent in the same period.

Investment by local governments grew 25.4 per cent from a year earlier to 1.31 trillion yuan, compared with the central government's 24 per cent growth in investment to 141.8 billion yuan in the first quarter.

Cash income for farmers grew by 12.1 per cent in real terms in the first quarter, the highest growth in a decade, but much lower than the 16.6 per cent real growth for urbanites.

The government has been struggling to lift living standards in rural areas, where farmers continue to languish despite the 20-year economic boom. On Wednesday, chairing a cabinet meeting on first-quarter economic performance, Premier Wen Jiabao emphasised the difficulties of raising grain production and lifting farmers' income, saying these were the two of the main problems facing the economy this year.

In its Blue Book released yesterday, the Chinese Academy of Social Sciences predicted that GDP growth this year would be 10.9 per cent, slightly higher than last year's 10.7 per cent. It forecast that the economy would maintain the up trend this year, although the pace of fixed assets investment growth has slowed in recent years. This made preventing an investment rebound the key to measures to cool the economy.