Rural Work Conference Promotes Modernization As

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E.O. 12958: N/A
TAGS: ECON EAGR EFIN PGOV SOCI CH
SUBJECT: Rural Work Conference Promotes Modernization As
Top Priority; Seeks to Address Imbalances

REF: 06 BEIJING 24338 and previous

SUMMARY
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1. (SBU) The annual Rural Work Conference, held in Beijing
December 22-23 2006, emphasized that modernization,
including agricultural technology, rural finance reform,
and energy efficiency, will be one of the Central
Government's top priorities in the coming year. The
conference also aimed to address economic imbalances by
expanding basic social welfare to provide subsistence
allowances in poor regions, which a researcher at the China
Academy of Social Sciences said will be particularly
important in Western and Central China. END SUMMARY.

MODERNIZATION KEY TO NEW COUNTRYSIDE
--------------


2. (U) Reiterating that the Central Government's New
Socialist Countryside policy will be a long-term endeavor,
participants at the Rural Work Conference, chaired by Vice
Premier Hui Liangyu, committed to increasing financial
support for rural areas in 2007. According to media
reports, the conference focused on the importance of rural
sector modernization, including promoting agricultural
technology, reforming rural finance, and encouraging energy
efficiency. A December 24 editorial in the government-
controlled Chinese-language People's Daily (Renmin Ribao)
characterized modernization as the most important task in
building the New Socialist Countryside.


3. (SBU) Observers noted that the Rural Work Conference's
modernization goal sets the tone for the Central
Government's rural policy in 2007. Xu Xiaoqing, Deputy
Director of the Department for Rural Development at the
Development Research Center of the State Council (DRC),
said that he expects rural policy, with an emphasis on
rural sector modernization, to be the focus of the Number
One Document for the fourth consecutive year when it is
published later this year.


4. (SBU) Du Xiaoshan, Deputy Director of the Rural
Development Institute at the China Academy of Social
Sciences (CASS) agreed, adding that reforming rural
financial institutions is especially important at this
stage of China's rural development. With more rural
residents seeking capital to improve agricultural
technology or pursue non-farm income through small business
pursuits, modernization must include rural finance, he said.
Min Tang, Chief Economist at the Asian Development Bank,
noted that rural finance will be a key component of the
upcoming National Financial Work Conference.

RURAL SOCIAL WELFARE AND THE HARMONIOUS SOCIETY
-------------- --


5. (U) The Rural Work Conference also announced that a
basic social welfare program would be expanded to cover all
rural residents with an income of RMB 700 (approximately
USD 90) or lower, a population estimated to be 23.7 million
people. Known as the Basic Guarantee (dibao),the program
has existed in urban areas for many years and already has
been instituted by several provincial governments (most
notably Shandong Province in Coastal China) in the
countryside. The Rural Work Conference committed to
launching the program nationally with the aim of narrowing
the urban-rural income gap as well as regional gaps.


6. (SBU) Du told Econoff that the program is a good example
of the cities supporting the development of the countryside,
and as a Central Government priority, the Basic Guarantee
will be critical to development in Western and, to a lesser
extent, Central China. He noted, however, that the rural
Basic Guarantee is modeled after its urban equivalent, and
he expressed some concern that the income thresholds and
dibao subsidies vary widely by region and locality. He
said, for example, that due to the higher cost of living in

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cities, urban social welfare covers residents whose income
is many times greater than the lowest rural incomes. Du
said he hopes urban-rural inequalities in the Basic
Guarantee system will be addressed.


7. (U) In addition to the Basic Guarantee, the Rural Work
Conference also reaffirmed the Central Government's support
for increasing funding for education and health care in
rural areas in 2007, both of which are priorities under the
New Socialist Countryside (see reftels).

RANDT