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THE Chinese Government promised to increase loans for the development of rural enterprises in the poor central and western provinces despite the nationwide austerity programme.

  State Councillor Chen Junsheng said the state treasury would offer five billion yuan (HK$6.7 billion) in loans to support rural enterprises in the region from next year until 2000.

  The amount was on top of a five billion yuan loan approved earlier this year.

  Mr Chen said the central Government would guarantee that the first loan would be available in the first quarter of next year.

  The extra cash came amid fears that the central austerity programme would badly hit the growth of industries in the countryside.

  Those industries were instrumental in absorbing the surplus rural workforce in the past decade, he said.

  According to mainland press reports yesterday, Mr Chen repeated his stand that greater efforts to boost rural enterprises was the fundamental way of solving existing problems in the countryside.

  The growth of rural enterprises has also helped increase the income of the rural populace, he said.

  But he warned that the heavy financial burden on peasants had slowed the pace of income growth in rural areas.

  The problem of ''blind drifters'' flocking to the cities for jobs worsened as fewer jobs were available for the 100 million surplus workforce.

  Mr Chen also conceded that the central Government, faced with a tight budget, had difficulty providing massive funds for rural industries.

  He indicated that the drive to increase macro-economic control brought adverse effects on the development of rural enterprises.

  Mr Chen said some people had a ''superficial and negative understanding'' of the spirit of macro-economic regulations.

  ''They wrongly believed that the austerity programme was a full-scale cutback,'' he said.

  ''[They believed that there should be] no more speeding up of the pace of development.

  ''Some regions have cut the staffing for the management of rural enterprises. It brought about anxiety.

  ''Some departments have imposed unreasonable levies and fines on enterprises. These increased their financial burden,'' he said.

  The shortage of funds and a chaotic financial system have weakened funds for rural development.

  That resulted in the closure and suspension of development projects of industries, the official said.

  Mr Chen said some foreign enterprises decided to pull out from their joint ventures because their Chinese partners had failed to provide funding.

  The official told a national conference on rural industries that they remained the most vibrant sector.

  The total value of production of rural enterprises so far this year has grown by a staggering 76 per cent compared with the corresponding period last year.



Cash boost for poor regions