City migrants help boost rural incomes

Mainland incomes rose faster in the countryside than in cities last year for the third year as migrant workers boosted their pay and the government strengthened the social safety net.

Rural per capita net income rose 10.7 per cent, against a 9.6 per cent increase for urban dwellers, partly because of the rise in migrant labourers and their wages, the National Bureau of Statistics said. Rural residents' income from benefits payments rose 21.9 per cent, almost double the urban pace, as the government boosted its budget for health-care handouts.

Rural spending power has been lifted by the wages earned by peasants working in cities, underscoring the broader benefits of the urbanisation drive championed by the incoming premier, Li Keqiang. Spreading gains in consumption would help sustain a growth rebound and reduce the economy's reliance on exports, which rose last year at less than half 2011's pace.

Zhang Zhiwei, chief China economist at Nomura Holdings in Hong Kong, said: "Rising rural incomes should help boost consumption and aid rebalancing. Growth will gear down as rising labour costs diminish investment incentives, but such consumption-led expansion will be more sustainable."

The trend may persist for a while as a declining working-age population helps push up migrant labourers' pay and the government keeps improving social safety net funds, including funds for healthcare in the countryside, Zhang said.

Rural per capita net income, which includes migrant workers' pay, rose more than that of urban residents in 2010 for the first time since 1997.