China will adopt more favorable policies and invest more heavily in the rural areas next year, according to a central work meeting on rural development which concluded on Thursday in Beijing.

Rural construction will claim a higher share in national debts and financial budgets in 2006, with more money to be spent on the improvement of living conditions in the countryside, the meeting has decided.

"This is the first time for the central authorities to invest so heavily in rural development," said Han Jun, an expert of ruralresearch with the Development Research Center under the State Council, China's cabinet.

"It means the focus of infrastructure construction would shift from the urban areas to the rural areas," said Han.

China has greatly increased its spending on farmers, agriculture and the countryside in recent years. It was estimated that in 2005, the central finance allocated over 300 billion yuan (37.5 billion U.S. dollars) to support rural development, a 50 percent rise over the figure of 2002.

"The weak status of agriculture has not changed yet," conceded China's Minister of Agriculture Du Qinglin.

Government statistics show that rural residents, who account for some 60 percent of the nation's total population, only have access to 20 percent of the country's medical resources. Farmers are in the similar inferior position in education and social security.

"It is imperative to increase investment for the building of a new socialist countryside," said Zhang Hanya, a research fellow with the National Development and Reform Commission.

He said "money" is a word underlined at the latest meeting and this would help promote the implementation of related policies.

Yet, how to guarantee the best use of the investment remains a problem to be resolved, the expert warned. According to Han, only one fifth of the money the government previously allocated went tofarmers, with the rest being used improperly.

Apart from direct financial support, China has announced the abolition of the 2,600-year-old agricultural tax as of Jan. 1, 2006, which totals 22 billion yuan (2.75 billion dollars) every year.

Follow-up measures would be taken to push forward reforms in the rural areas based on the tax reform, the central work meeting said.

Reform should go further in the rural financial system, said Tang Min, chief economist of Asian Development Bank in China.

Government statistics show that farmers save more but borrow less from financial institutions in the rural areas. It is hard for them to get loans due to out-of-date financial mechanisms.

"Only when farmers could borrow money, would the countryside bemore productive," said Tang.

Source: Xinhua