Urban-rural divide to narrow this year

PUBLISHED : Thursday, 19 April, 2012, 12:00am
UPDATED : Thursday, 19 April, 2012, 12:00am


The income gap between the mainland's rural and urban residents is expected to continue narrowing slightly this year after reaching its widest point in recent years, a government think tank said yesterday.

The urban-to-rural income ratio, which reached a record high of 3.33 to 1 in both 2007 and 2009, should drop to 3-1 this year, according to the 'Analysis and forecast on China's rural economy 2011-2012', issued yesterday by the Chinese Academy of Social Sciences.

Statistics for rural income cover farmers and migrant workers who still have their permanent residence registered in rural areas.

The report said the average rural income was expected to grow by 10 per cent this year and continue outpacing growth in urban areas for a third straight year. It said the average yearly income for rural residents was expected to exceed 8,000 yuan (HK$9840), largely on the strength of rising pay for factory workers, rather than from greater farming profits.

Figures from the National Bureau of Statistics show that the average rural income last year was 6,977 yuan. The 10 per cent increase for this year was calculated after removing the inflation factor - the consumer price index rose 5.4 per cent last year.

Zhang Hongyu, director of the Department of Policy and Regulation at the Ministry of Agriculture, said of the trend: 'By keeping [it] up, we may be able to narrow the gap to 2.5-1 or less in five years,' he said. 'Like rowing upstream, not to advance is to drop back.' The urban-to-rural income ratio was 2.5-1 when China launched its reform and opening-up policy in 1978.

Though prices for farm produce were expected to remain high this year, the rise in rural residents' income would mainly come from higher salaries for those in enterprises which had been facing labour shortages in recent years, the report said.

Professor Guo Wei, who specialises in rural affairs at the State Council Research Office, said higher prices for their produce had not resulted in greatly increased income for farmers because of rising costs.

'Compared with income from working in businesses, the profits from farming have not increased, or might have dropped,' he warned, adding that the government must introduce more preferential policies for farming to prevent it from becoming even less attractive in the future.

Still, the think tank's report offers optimistic predictions for China's grain output this year, saying it may reach a new high of 580 million tonnes.

'Considering that grain prices have kept growing in the past several years, and as the central government has intensified support for crop growers, we believe the possibility of seeing a ninth consecutive increase is still there,' said Zhu Gang, one of the report's authors.

Growing demand for food is forcing China to import more this year, with its agricultural trade deficit expected to swell to US$40 billion, up from US$33.8 billion last year, the report projected.

Last year, China recorded a 47 per cent rise in its agricultural trade deficit, as domestic supplies of soya beans, edible oil and cotton fell far short of demand.

The report said that although exports of farm produce had kept growing, these products still lacked competitiveness in the international market.