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Shot in the arm for rural infrastructure

By Hu Yinan and Li Jing (China Daily)
Updated: 2008-11-14 08:45

About 4 to 5 percent of the additional 100 billion yuan ($14.65 billion) expenditure the central government announced on Tuesday will be used to improve rural infrastructure, a source in the Ministry of Agriculture (MOA) has said.

Rural infrastructure is among the 10 major steps China is taking to raise domestic demand and boost the economy, which is the aim of the central government's 4-trillion-yuan stimulus package. Eleven ministries have been allocated 100 billion yuan and given time till early March to spend it.

The Ministry of Water Resources has said it would use one-fourth of the 20 billion yuan it has got to provide safe drinking water in rural areas, and one-tenth to expedite the North-South water diversion project.

The central government spent 420 billion yuan last year to improve life in rural areas. This year the expenditure is bound to be higher, though the National Development and Reform Commission (NDRC), China's top economic planning body, is yet to announce how much money from the 4-trillion-yuan package would be spent on each of the 10 areas or the specific implementation steps to be taken.

Improving rural infrastructure may not be the most immediate effective way to fuel domestic consumption, but it is an urgent task when rural areas are undergoing historic changes, the MOA source said.

"It's important because thousands of factories in coastal areas have closed down and countless numbers of migrant workers have been laid off. Things have to be improved for these people who could be forced to return home to their villages," the source said.

At least 1 million new jobs could be created in the last 50 days of this year, said Liu Junsheng, a senior researcher with the Labor-Wage Institute of the Ministry of Human Resources and Social Security. The stimulus package will help solve the unemployment problem to a certain extent.

"Increasing expenditure on rural development programs can create jobs directly for surplus laborers in the countryside," Liu said. "They don't even need to move to other cities because they can earn a living at home."

A report issued by NDRC's Industry Research Institute earlier said upgrading existing roads, providing safe drinking water, and improving reservoirs and power grids in rural areas would cost about 4 trillion yuan. Add that to the North-South water diversion project, which is a core component of rural projects, and the money needed for rural infrastructure improvement would be more than the entire stimulus package.