The government plan to abolish the tax on so-called special agricultural produce (farm produce other than grains) next year is encouraging news for the vast rural population.

The plan was announced on Monday by Jin Renqing, the country's finance minister. He said the ministry has also decided that rural areas are to get preferential treatment when the State is investing in culture, education and healthcare.

As Jin pointed out, the government is trying to change its fiscal policy to such a degree that agricultural development could be financed with revenue from industry and that rural areas could get support from cities and towns.

The policy target will take some time to realize but it marks an unprecedented policy perspective.

Anybody with some knowledge about the country's process of industrialization of several decades ago would realize the significance of this.

Under the planned economy, rural regions and people doing agricultural work made tremendous contributions to China's industrialization.

There was a huge gap between the prices of agricultural produce and industrial products. The farmers, meanwhile, had to pay various agricultural taxes without the welfare benefits that the city workers enjoyed.

The figures given by academics for that rural-urban disparity between the 1950s and the 1970s could be considered as some kind of capital flow and it could range from 80 billion yuan (US$9.68 billion) to over 2 trillion yuan (US$9.6 billion to US$241 billion).

There is no doubt that all this laid a solid base for industrial growth and infrastructure construction.

Rural areas and the people there played a decisive role in promoting China's economic and social progress, though they may not be aware of that.

The decision to industrialize China was a natural choice considering the poor industrial level in the newly founded People's Republic of China, especially for the sake of defence and modernization. Many other countries did likewise in the same phase of development.

Decades later, things have changed. A comparison of the income, education levels, living costs and other indices among rural and urban families show that rural areas lag far behind urban ones.

As long as this considerable gap exists in the same country, it will be impossible to establish a comprehensively well-off society as a whole.

The country's target of common prosperity and modernization can never be achieved unless that gap is bridged. It will even be hard to stimulate domestic demand, the country's major economic engine.

Spending some industrial revenue to help agricultural growth might be a good way out under current circumstances to accelerate the development of rural areas.

It is common practice in Western countries for part of the gains of industry to be injected into the agricultural sector to maintain balanced growth.

The current administration has regarded the problems related to rural areas, agriculture and farmers as of the utmost concerns since they took office earlier this year, as the finance minister said.

The specific measures that Jin Renqing has announced are vivid proof of his declaration.

The total amount of tax on special agricultural produce accounted for less than 1 per cent of government income last year.

But a survey among farmers in East China's Anhui Province has indicated that the abolition of this tax will decrease their financial burden by 65 per cent.

Getting rid of this tax would be fantastic news for rural areas.

However, given the complexity and diversity of rural problems, much has to be done to guarantee that the latest decision is fully implemented in practice.

(China Daily September 5, 2003)