The governor of China's richest province is becoming increasingly concerned about widening regional disparities and the growing gap between urban and rural incomes. In his work report to the opening session of the Guangdong People's Congress, Governor Lu Ruihua yesterday cited uneven development and low rural incomes as 'major problems' for the province. By contrast, Mr Lu devoted little space in his work report to either the Pearl River Delta - by far the province's richest region - or the province's relationship with Hong Kong. Mr Lu did not refer to a possible free-trade area between the mainland and Hong Kong, which was recently discussed by central Government and SAR officials in Beijing. In a 27-page address, Mr Lu devoted just three brief sentences to cross-border co-operation, saying Guangdong, Hong Kong and Macau should continue 'to improve inter-governmental communication and co-ordination mechanisms'. Mr Lu noted that Guangdong's agricultural output increased just 2.7 per cent to 101 billion yuan (HK$94.95 billion) last year, while industrial output grew more than 11 per cent to 472 billion yuan. A similar disparity was seen between rural and urban incomes, Mr Lu said. Last year the average income of Guangdong's farmers increased 3.5 per cent to 3,770 yuan. On the other hand, the average disposable income of urban residents grew 7.3 per cent to 10,415 yuan. In an effort to right the imbalance, the Guangdong Government last year allotted 300 million yuan to pay the school fees of the children of poor families - defined as those having an annual income of less than 1,500 yuan - and Mr Lu pledged the school-fee subsidy would continue. As a result of the programme, he said, children from more than 600,000 rural households did not have to pay any school fees. He said Guangdong's finance department provided 4.3 billion yuan towards one-off assistance measures for underdeveloped areas in the province. He also highlighted slowing export growth as a challenge. While Guangdong's largely Hong Kong-funded export sector is a valuable source of jobs for underemployed rural labourers who head to the cities, last year the province's exports increased just 3.8 per cent to US$94.5 billion (HK$737 billion). Guangdong's economic targets this year include gross domestic product growth of nine per cent, an 11 per cent increase in retail sales and fixed-asset investment growth of eight per cent. '[Guangdong must] completely raise its international competitiveness and seize the historic opportunity stemming from China's accession to the World Trade Organisation,' Mr Lu said.