Global Poverty Reduction and Development Forum-2013-Chapter III

Chapter III: Promote Balanced Allocation of Public Resources and Improve Public Services in Rural Areas

Xu Xiaoqing

Senior Research Fellow,

Director General,

Rural Economy Research Department of

Development Research Center of the State Council

 

Unbalanced development between urban and rural areas is a common problem encountered by many countries in the process of economic growth. Since its reform and opening up, China has experienced fast economic and social development. However, there are also some disadvantages. For example, the urban-rural dual structure has not undergone a fundamental change; no mechanism for balanced allocation of public resources has formed in urban and rural areas; urban and rural economic and social gap is widening, and the contradiction between urban and rural development has become increasingly deepened; and public services in rural areas are badly insufficient.

After the 16^th National Congress of the Communist Party of China, the Central Government explicitly proposed to solve the problem of "agriculture, farmers and rural area" with the new idea of balancing urban and rural economic and social development. In the report of the 16^th National Congress of the Communist Party of China, it is clearly stated that "balancing the urban and rural economic and social development, constructing modern agriculture, developing the rural economy and increasing farmers' income are major tasks in building a moderately prosperous society". It is declared that the period that relied on agriculture, rural areas and farmers to extract accumulations to promote industrialization and urbanization is over and more resources will be extracted from industry and urban areas to drive the rural development. Since then, the CPC Central Committee and the State Council have issued a series of major initiatives, so as to promote balanced allocation of public resources and free flow of production between urban and rural areas, and the integration of urban and rural economic and social development.

In the report of the Eighteenth National Congress of the Communist Party of China in 2012, it is further specified to "form the new relations between workers and peasants as well as between urban area and rural areas, featuring promoting agriculture with industry, driving the rural areas with the cities, workers and peasants seeking mutual benefits, and urban-rural integration." This article is based on the theory and practice of China's urban-rural relations, and focuses on in-depth analysis of public services in rural areas. This report strives to recommend policy on promoting the optimal allocation of urban and rural public resources, so as to significantly improve public services in rural areas and speed up the realization of a new pattern of integrated development in China.

1. Theoretical foundation for promoting balanced allocation of urban and rural public resources

1) The Lewis Model

The foremost theory of urban-rural dual structure initiated by Arthur Lewis (A. Lewis) is the basic theory explaining the flow and allocation of urban and rural elements. In 1954, Lewis proposed a dual economy model in his classic essay Economic Development with Unlimited Supply of Labor. The core of this model is that: in developing countries, there are 1) an agricultural sector dominated by traditional production mode in rural areas; and 2) a modern sector dominated by manufacturing industry in urban areas.

As there are surplus labors with zero marginal productivity in agriculture industry in developing countries, the transfer of surplus labors in agriculture to non-agricultural sectors will promote the gradual reduction of dual economic structure. In other words, the difference between agricultural and industrial labor productivity enables labor supply in the traditional agricultural sector to have the dual features.

In the traditional agricultural sector, the amount of arable land was limited, and production technology breakthroughs were difficult in the short term. So there was marginal labor productivity approaching zero in agricultural production, and the labor presenting unlimited supply. Thus the rural labor was cheap, the industrial sector can pay less labor remuneration to transfer out the rural labor gradually, and put more capital to the expansion and reproduction process. As a result, they can absorb more farmers into the industrial sector, and form a benign operation, prompting the non-agricultural transfer of rural surplus labor and enabling the dual economic structure gradually to transform into a unitary structure.

2) Lewis, Ranis and Fei Model

Based on the framework of Lewes, Ranis and Fei in 1961, and taking into consideration the development of agricultural sector itself, as well as the improvement and growth of the dual economic development First, the remaining farmers are divided into two parts, some are those who do not increase total agricultural output, that is, people with the zero marginal product, the other part are those who do not increase the total agricultural surplus. Though marginal output is not zero, they cannot meet their own consumption needs.

Lewis-Ranis-John C. H. Fei model believes that the employment number transfer of workers and peasants must go through three stages: the first stage is the transfer of farmers with the zero marginal productivity to the industrial sector. The transfer of this part of farmers will not have an impact on the level of total agricultural output. The second stage is the transfer of farmers with the non-zero marginal productivity to the industrial sector. It means that the agricultural sector has transferred the labor with zero marginal productivity, and the labor's unlimited supply phase ends, indicating the arrival of the Lewis turning point. The turning point is when the total agricultural output levels decline, causing agricultural products' (especially grain) relative prices to increase, thus forcing the industry to raise wages and increase costs. In the third stage, there is a big difference in the level of real wages in the two sectors, and the agricultural sector continues to transfer rural labor force to the industrial sector. As the agricultural marginal productivity of this part of labor is higher than the average productivity, it needs to develop agricultural wage level in accordance with marginal productivity. Agricultural wage levels are increased, which in turn pushes the industrial sector to increase wages. In this stage, market forces play a strong role and the labor wages are determined really following the principle of maximizing the marginal productivity.

In short, the central idea of Lewis-Ranis-Fei model theory is that the development process in developing countries will be accompanied by labor and agricultural surplus to be transferred from the traditional agricultural sector to the modern industrial sector. The industrial sector's expanding ability is greatly dependent on agricultural production conditions, because the agriculture industry provides raw materials and food for cities. If there is no surplus in agricultural sector, industrial sector growth will become very difficult. Thus, in the process of modernization in developing countries, we must adhere to the coordinated development strategy in industry and agriculture as well as in urban and rural areas.

3) Geographic dual structure theory

In 1957, the Swedish economist Myrdal published the book entitled "Economic Theory and Underdeveloped Regions". Myrdal believed that as cities have advantages in infrastructure and human capital, their development will be faster than rural areas. In the state of unbalanced development, cities gather more and more resources, and their development becomes faster and faster. While rural resources will continue to be transferred out, and will gradually decline, resulting in growing disparity between rural and urban areas. Myrdal called this phenomenon "cumulative causal loop effects". Under this effect, urban development becomes faster, and the development of rural area becomes slower. Myrdal proposed that in order to solve the problems of urban and rural opposition, the government must implement differentiation development strategies, lay emphasis on rural development, and create the conditions so that the gap between urban and rural areas can be narrowed.

Zhang Peigang also pointed out in 1992: "Just regarding industrialization as the proportional increase in the manufacturing sector (especially the heavy industry sector) leads to only focusing on centralized resources to invest in manufacturing. This ignores the transformation of traditional agriculture and rural economic development and only focuses on the introduction and applications of advanced technology and equipment. It also ignores the corresponding change in the social and economic structure. This is one of major causes of difficult advancement and repeated failures in post-war industrialization process in developing countries."

2. Progress and Status Quo of Rural Public Services in China

Since the 16^th National Congress of the Communist Party of China, various authorities in different regions have been promoting urban and rural economic and social development in accordance with the requirements of the CPC Central Committee and the State Council. They are gradually breaking the pattern of urban-rural dual segmentation, and China's urban-rural relations are undergoing profound changes. Currently, accelerating the equalization of basic public services and enabling the development results to benefit all people, including rural residents, has become the major historic task of China's development. Promoting and providing urban and rural public service equalization is an important symbol to narrow the development and achieve social fairness and justice.

Building a basic public service system featuring "benefiting all, equalization and integration" has become the basic goal of urban and rural public service system reform. With the initiation of the major strategy of coordinated urban and rural economic and social development, which has obtained the great attention and support from all levels of government, rural society has entered a new stage of rapid development. Rural education, health care, pension, culture, rural road construction, drinking water for people and livestock, and rural energy are included in the scope of public expenditure. Judging from the absolute number level, the rural public services in China have been significantly improved, compared with the past decade.

1) Significant Improvement in Rural Infrastructure

There have been significant improvements in rural infrastructure in the past decade as a result of significant effort and investment. In 2002-2011, 2.72 million kilometers of highways were newly built or rebuilt in China's rural areas, with 2.2 million kilometers of highways newly open to traffic. There were more than 50,000 new rural passenger lines, and more than 600,000 new daily shifts. By the end of 2011, the rural highway mileage nationwide had reached 3.537 million km, the rural road maintenance mileage accounted for 96.1% of the total mileage, the township road rate reached 99.98%, and the road rate of village under the jurisdiction of the villager committee reached 99.39%. The regular passenger bus rates of the towns and villages under the jurisdiction of the villager committee were 98.12% and 91.47%, respectively. The pace of rural bio-gas construction was accelerated. From 2002 to 2012, a total of about 30 million household biogas obtained support from the government in China. By the end of 2012, there were over 40 million biogas households nationwide.

During the 11^th Five-Year Plan period, China achieved its goal of "every village installed with telephones and every township with access to the Internet". By the end of 2010, national administrative villages and natural villages with more than 20 households had the phone rates of 100% and 94%, respectively. Nearly half of the villages and townships nationwide have built information service. They also built the national integrated rural information service platforms such as "Agricultural Information Platform" ("Nong Xin Tong"), "Information Village", and "Gold Farmers Platform" (Jin Non Tong") and so on. More than 20,000 agriculture-related Internet sites initially formed a nationwide rural information service network.

2) Accelerated Reconstruction of Dilapidated Buildings in Rural Areas

There has been great support in transforming many buildings in rural areas to enhance and improve small towns. In 2008, the Central government allocated 200 million yuan and began to support the pilot renovation of dilapidated buildings in rural areas in Guizhou Province. On this basis, in 2009, the Central finance allocated another 4.0 billion yuan as the subsidy for rebuilding nearly 800,000 dilapidated houses in rural areas. Central fund subsidy has expanded to the 950 counties in middle and western regions, accounting for nearly half of the total counties (cities) with villages nationwide.

In 2010, the Central government expanded the pilot implementation scope of 'dangerous house reconstruction' in rural areas. Areas include the counties on the national land border, the counties in the western region, key counties in the scope of national poverty alleviation and development, the counties enjoying the western development policy determined by the State Council and the field of Xinjiang Production and Construction Corps. All included in the rural reconstruction pilot, supported and completed the renovation of 1.2 million dilapidated buildings of rural poor households.

In 2011, all counties in the central and western regions were included in the rural reconstruction project, and the goal was to support and complete the renovation of 2.65 million dilapidated buildings in rural poor households. It is the first time for the country to give such great support in transforming the farmers' houses since the founding of new China in 1949. As of the end of 2011, China's rural residents per capita living area reached ​​36.2 square meters, increased by 36.6% compared to that in 2002, with 94.1% of households houses having sanitary installation, 43.5% having heating equipment, and 38.2% using cleaner fuels.

3) Upgraded protection level for rural compulsory education from public finance

At the end of 2005, China launched the reform of the security mechanism of the rural compulsory education funding. The compulsory education in rural areas was gradually incorporated into the scope of public finance protection and established funding at the central and local levels according to projects and proportion.

Firstly, public funds for rural compulsory education were improved. In 2011, the minimum standards of average public funds for rural primary and secondary school students were raised to 500 yuan for elementary schools and 700 yuan for junior high schools in the Midwestern region, and 550 yuan for rural primary school and 750 yuan for junior high schools in the eastern region.

Secondly, the burden of students' families was reduced. With the policy of "two exemptions and one subsidy" including "free fees, free textbooks, and gradual grants to boarder students' living fees" covering students in rural areas nationwide, 130 million students in 400,000 rural primary and secondary schools are all exempted from tuition and fees. Approximately 30 million rural boarding students are exempted from accommodation fees, so 12.28 million boarder students from poor families in the mid-western region receive a living allowance. Further, 26 million rural students get nutritious meal supplement.

Thirdly, school conditions were improved. On the basis of continuing to consolidate the popularization of compulsory education, teacher resources integrated management in urban and rural areas, thus solving migrants' children's education and promoting a balanced students source of junior high schools. Through the implementation of "special post plan for school teachers during the rural compulsory education period", it attracted talented people to teach in rural areas, employing about 50,000 teachers in special posts, covering 16,500 schools in 21 provinces. In 2010, the national primary school net enrollment rate reached over 99%, gross enrollment rate of the national junior middle schools reached 100.1%, and three-year junior high school retention rate reached 94%. Therefore, China's urban and rural compulsory education generalized system of preference has been initially built and improved.

4) Rural medical and health service system established

In October 2002, the State Council held a national rural health work conference and issued the "Decision on Further Strengthening Rural Health Work" in the names of the CPC Central Committee and the State Council. It clearly indicated to "gradually establish a new rural cooperative medical care system". In 2003, the "Opinions on the Establishment of New Rural Cooperative Medical System by the Ministry of Health and Other Departments" was issued, proposing to achieve a new type of rural cooperative medical care system in the country with the basic coverage of rural residents by 2010.

As the new rural cooperative medical system is fully expanded, the health insurance covers more of the population gradually. As of the end of 2012, there are 2,566 counties, cities and regions that carried out the new rural cooperative medical work and the new rural cooperative participation rate reached 98.1%. In the rural areas, the health network gradually improved at the county, township and village levels. The number of village doctors and health workers increased from 0.877 million in 2003 to 1.126 million in 2011. During 2003-2011, China's rural infant mortality rate fell from 2.87% to 1.12%, the rural maternal mortality rate dropped to 26.1/0.10 million from 65.4/0.10 million. China's new rural cooperative medical system uses the cost of 200 yuan per capita to provide basic medical security for more than 800 million rural population, which has become an important part of China's rural social security system.

5) Preliminary establishment of new rural social pension insurance system

In 2009, the State Council issued the "Opinions on Carrying out the New Rural Social Pension Insurance Pilot Guidance" report. China started the "New Rural Insurance" pilot to explore the establishment of the new rural insurance system combined with individual contributions, collective subsides, and government subsidies. Currently, the new rural insurance pilot has covered the Tibetan Autonomous Region, Sichuan, Yunnan, Gansu, Qinghai and four prefectures in the south Xinjiang and border counties, impoverished border, inner and autonomous regions and counties.

By the end of 2010, in the 2050 countries nationwide with villages, in most regions of a total of 838 counties and four municipalities, the new agricultural insurance pilot was carried out, with the coverage (coverage of rural population aged 60 or older) of 24%. The number of participants reached 103 million in rural areas, with 28.6255 million receiving treatment. As of 2011, the national new rural social pension insurance pilot coverage reached 60%. 1,914 counties, cities and regions in the 27 provinces, autonomous regions, and some of the regions and counties in four municipalities carried out the pilot, and the number of participants reached 330 million people, with 8,525 people actually receiving treatment. In 2012, China has achieved full coverage of the new insurance system.

6) Establishment of rural minimum living security system

Since the Sixteenth National Congress of the Communist Party of China in 2002, the rural subsistence allowances system was significantly lagged. Before 2004, the full establishment of rural subsistence allowances system was carried out only in three municipalities, i.e. Beijing, Tianjin, and Shanghai, as well as two provinces, Zhejiang and Guangdong. After 2004, the rural subsistence allowances system sped up its construction.

In 2007, the State Council issued the "Notice on Establishing Rural Minimum Living Security System Nationwide". The minimum living security system was established in rural areas nationwide. By the end of 2010, 5.563 million farmers in 5.341 million rural households received centralized support. The financial departments at all levels nationwide issued 9.81 billion yuan of funds for the rural Five Guarantees (Wu Bao). As of February 2012, there were 52.825 million rural residents in 26,863,000 households receiving the rural minimum subsidies. There was coverage in all counties, cities and regions with agricultural population, with gradually improved security standards. The national average standard of rural minimum subsidies is now 143.2 yuan per month per person.

7) Rural cultural service system was initially formed

Significant strides have been made toward the goal of preserving Chinese and all groups' cultural heritage. By 2011, there were 40,390 township (sub-district) cultural centers, more than 200,000 million village cultural rooms, more than 500,000 administrative villages establishing farmer bookstores nationwide, accounting for 80% of total administrative villages nationwide. At national, provincial, city, county, township and village levels, there are public cultural facilities, some have formed a network and basically achieved full coverage of public cultural service system. 230,000 Fitness Projects for Peasants have been built; more than 100,000 administrative villages have public sports facilities; and a new sports area was ​​230 million square meters, benefiting 330 million farmers.

3. Obvious problems and their causes in China's rural public service

Although China has achieved a certain amount of improvement in the level of public services in rural areas, the mechanism to promote the balanced allocation of public resources in urban and rural areas is not completely formed. The urban-rural dual structure is still deeply rooted and widely influential and the misallocation of resources remains a serious problem.

The public financial coverage and strength is not powerful enough and the existing investment cannot meet the actual needs of various public goods, including public infrastructure investment system, education, health, cultural and other public service system, and the social security system. Although this pattern has been loosened and changed, adjustment is needed and it takes time to form unified institutional arrangements. Improving rural public service task is still an arduous task.

1) Farmers' income still at a relatively low level

Since the 1980s, Chinese urban-rural income gap has been widening. Despite the recent three years, the income gap between urban and rural residents has not significantly narrowed. The per capita disposable income of urban residents is still 3 times per capita net income of rural residents. In 2012, the primary industry's added value was 5.2377 trillion yuan, accounting for 10.1% of total GDP. Agriculture remained at about 10% of the share in the last three consecutive years.

It can be predicted that the share of agriculture in GDP will continue to decline. As can be seen in Figure 1, agricultural workers account for the proportion of social workers has been in a downward trend. At present, the Chinese agricultural employment is 270 million or so; the proportion of total employment decreased from 60.1% in 1990 to 34%. The proportion of per capita GDP created by agricultural has declined from 45.1% in 1990 down to 29%, far below the levels in the United States, Japan and other developed countries. As a result, China is still in a weak position in agriculture. The lagging agricultural development has not yet been fundamentally changed.

 



The urban-rural income gap is too large, which has become an important factor affecting social harmony. If a variety of subsidies, labor welfare and social security are included in the income of urban residents and the parts of income which cannot transform into disposable income of rural residents are excluded, the income gap between urban and rural residents may be more than 5 times.

Currently, the consumption gap between urban and rural residents is growing. In 2011, per capita consumption expenditure of urban residents was 9,940 yuan more than rural residents, equal to 2.9 times the rural consumer spending. In 2012, the Engel coefficient of rural residents was 39.3%, 3.1 percentage points greater than urban residents. Urban and rural development is still unbalanced in China, and it is difficult to achieve modernization of rural areas relying solely on the farmers themselves.

2) Rural drinking water safety issue still a problem

At present, the rural drinking water safety problems have two main aspects: 1) new projects are large in scale and very difficult; and 2) hundreds of thousands of projects that have been built actually have long-term benign operation. According to the survey in 2009 conducted by the Ministry of Water Resources, by the end of 2009, the population with insecure rural drinking water was about 220 million. After the deduction of 130 million people who have been helped in 2010 and 2011, there are still 90 million people.

The issue mainly includes two parts. First, the populations have already been approved to enter the national rural drinking water safety project planning (2005-2015) but the plan has not implemented currently. Second, there are other new populations with unsafe rural drinking water. The additional population are divided into three cases: 1) the population that is not included in national planning after review by the Ministry of Water Resources in 2004; 2) the new population in recent years due to water pollution and depletion, earthquake, countries' improvement in water quality standards, engineering immigrants and other reasons; and 3) the new population in the national expanded solution range, including agriculture, forestry reclamation farms, and Tibetan herders settlement areas.

Meanwhile, with the continuous progress of construction projects, easy construction projects in various regions have been basically completed, but the majority of the remaining populations are in the region which is relatively distant from water sources and the water quality there is poor, with difficult terrain. Currently, most of the provinces and cities have less than 500 yuan of per capita investment criteria, and many areas have real per capita investment which is much higher than approved national standards, so the existing subsidy standards cannot meet the construction needs.

3) Weak Rural Education

In the rural compulsory education period, the school conditions remain poor. The school buildings, teaching facilities and equipment cannot meet the basic standards of the national requirements in a considerable part of the rural poor areas and ethnic minority areas, and border areas. The overall quality of rural teachers needs to be raised. Low salaries, lack of teachers and other outstanding issues seriously hamper the improvement of teaching quality. Urban and rural school student's per capita public funding gap is more prominent. There is still a considerable number of rural primary and secondary school student's per capita public funds did not meet national benchmarks quota.

The "Compulsory Education Balanced Development Report of 2010" shows that although the education gap between the schools in towns and villages in the county is small (primary and secondary schools are in the range between 1-2 times), nearly 40% of per capital public funds of the rural junior high school students did not reach the national benchmarks of 500 yuan for the mid-west region and 550 yuan for eastern region. 28% of the per capital public funds of the rural primary school students in the regions or counties did not reach the national benchmarks of 300 yuan for the mid-west region and 350 yuan for eastern region.

From the perspective of the urban-rural gap, the operating expenses of 60 % of junior secondary school students in the urban areas are higher than those in the rural areas, with many distributed in the west. The per capita public funds for students of 50% of the elementary school and junior high school is higher than those in rural areas. Primary and secondary school conditions in rural areas still lag behind. In 2009, the ratio of teachers with junior college and higher education in rural primary schools reached 71.7%, 18.9 percentage points lower than those in the cities. The ratio of junior high school teachers with undergraduate and above reached 54.4%, 25.3 percentage points lower than those in the cities.

In 2009, the special supervision and check conducted in 109 primary and secondary schools in 15 counties in provinces showed that the western provinces had widespread vacancies of rural teachers, and substitute teachers have the variation in levels, which is still common in primary schools in the western rural areas. In addition, the rural school dropout rate in the western region is relatively high, in some places up to 15% or more. This also constitutes a serious impact on improving the quality of compulsory education in the western region. Although there is the "two exemptions and one subsidy" policy, but the junior high school dropout rates rose due to unqualified merge of the rural schools and the rise of the new "idea of uselessness of study" in some areas.

In terms of pre-school education, the 2009 Report by the Central Culture Work Committee of Chinese Peasants' and Workers' Democratic Party shows that in 2007, the national urban school gross enrollment rate three years before entering schools reached 55.6%, with only 35.6% in rural areas. This indicates a difference of 20 percentage points, meaning the gap between urban and rural areas increased by 2.96 percentage points than that in 2006, and 3.81 percentage points higher than that in 2005. According to the World Bank's Report 2011, over the past 20 years, the number of kindergartens in rural areas in China was reduced by half, from 130,000 in 1986 to 64,700 in 2006, while during the same period, the number of kindergartens in the urban areas increased from 24,500 to 31,800. The number of kindergartens in villages and towns increased from 11,900 to 33,900.

Student-teacher ratio is also a good indicator measuring the quality of educational services. According to the 2008 data released by the Ministry of Education, the national average is 17:1, with 9.5:1 in cities, 19:1 in county seats, and up to 34:1 in villages. The quality difference between rural and urban areas is also reflected by teachers. During the "11^th Five-Year Plan" period, more than half of preschool teachers nationwide did not have professional tiers. Among them, the city ratio was 51.85%, the township ratio was 54.8% and the rural area ratio was 69.88%. World Bank's Report 2011 shows that in China, the ratio of teachers with special teaching qualifications (or related degree) in public kindergartens (and preschools) was only 48% in the city, and decreased to 34% and 18% in the towns and rural areas.

4) Ineffective Allocation of Urban and Rural Medical and Health Resources

At present, China's urbanization is in the rapidly advancing stage. A large amount of rural labor flows into the cities, with continuous expansion of city size. The scale and speed of population movement between cities is also enhancing, which has raised new challenges for urban and rural medical and health system. In urban areas, the population size growth will require configuring more medical resources. However, affected by the urban-rural segmentation household registration system, local government fiscal capacity constraints and other factors, the social integration problem of floating population has not been solved. There are still significant obstacles in the enjoyment of basic public health services, basic medical insurance benefits, etc. Relevant policies are urgently needed to adjust and improve.

In addition, if the social inclusion issue is not well-resolved, it will further exacerbate the personnel's instability and the disorder of medical resource allocation and planning challenges. In rural areas, a large outflow of labor puts forward new requirements on medical resource allocation, medical services and service delivery methods.

The new rural cooperative medical insurance and financial security are also facing new problems. In rural areas, the major illness threatens the health of farmers, seriously affecting the quality of the rural labor force and their quality of life. The overall level of rural health is not high, the quantity and quality of health resources, health infrastructure service conditions and health status of the population have lagged far behind urban areas. There is very uneven development in different areas, some rural areas, especially in villages in poor and border areas. The capacity of rural health services is still weak, and the rural health personnel skill level is not high.

5) Lack of financial security for public services in rural areas from government

In Chinese urban and rural social welfare spending, the gap in the proportion of government investment is significant. From the specific composition, urban social welfare spending's proportion of government investment (21.82%) is far greater than that in rural social welfare spending (5.26%). The rural public service supply division of responsibility by the central government and local governments is not rational.

According to the theory of fiscal decentralization, the central government is primarily responsible for national public services; local governments are responsible for local public services; cross-regional public services are jointly provided by the central and local or several regions. The 1994 Reform Tax System divides the central and local financial authority, but powers are still vague and mixed, especially in rural public goods and public services supply. The product that ought to be invested by a higher level government is transferred to the lower level of government through the transfer of powers. The county government bears a large responsibility for the supply of public services in rural areas, but the central and western regions generally have inadequate financial resources, resulting in rural residents not enjoying the corresponding basic public services.

The financial transfer payment system is based on the household population. Currently the exclusive public services provided by the city government related with the permanent urban residence certificate in the social welfare system mainly includes: social assistance services focus on the urban minimum living security; government subsidized housing arrangements with affordable housing and low-rent housing mainly in kind or rent subsidies; and equal opportunity in urban public schools. In the context of the increasing mobility of the population, the local financial resources and powers in the flowing regions do not match. It is a prominent issue that the powers are unable to provide basic public services and social security for new immigrants according to the level enjoyed by the existing household population.

6) Slow pace of reform for the system related to the improvement of rural public services

Chinese labor mobility is gradually increasing. However, the labor market is still divided. In addition to migrant workers having the lowest level of labor protection, other types of labor are often subject to various constraints. Although laws and regulations promote and protect the equal employment and oppose discrimination in employment, the labor market reforms are not synchronized. The relevant law enforcement is not in place, resulting in a very serious problem of employment discrimination.

Migrant laborers are unable to receive the same treatment as locals. The official employees in a unit formation and the employees with contract employment receive a big difference in treatment, resulting in unequal employee status and unequal pay for equal work. Currently the segmented public service systems in urban and rural areas are tied together with the corresponding households, leading to the household registration system with "gold-bearing" difference.

In recent years, many local governments have claimed that they have carried out or will carry out various types of household registration system reform, but most of the reform either is a mere formality, or still has significant limitations. Most of the household registration reform is mainly aimed at non-agricultural households in the jurisdiction area (often the county, or at most prefecture-level city), but the household migrants across administrative regions are basically not open.

In addition to that, the cross-regional flowing population household registration reform has been slow, and large cities and even some medium-sized cities household registration reforms are not open at all. The household registration system raises the threshold of migrant workers entering into the city, making the urbanization stagnant. the barriers for migrant workers to seek equal opportunities, equal treatment, and rights protection limit in integration into urban society.

4. Basic principles for promoting the balanced allocation of public resources and improving public services in rural areas

It is required to carefully follow the requirement of the Eighteenth National Congress of the Communist Party of China, regarding reform and innovation as the driving force to accelerate the improvement of institutional mechanisms. actively adjusting the urban and rural planning layout and industrial structure, comprehensively improving production and living infrastructure of farmers, and promoting rural-urban elements equal exchange and public resources balanced configuration is very important. First, we must adhere to the people-oriented principle. Promoting the balanced allocation of public resources between urban and rural areas shall focus on boosting the farmers' overall development. Currently, the core problem which constrains comprehensive development is that the farmers and urban citizens cannot fully enjoy the same rights. We must focus on the core of "protecting and enhancing farmers' interests, giving full attention to the driving role played by the industrialization, urbanization, and market-orientation for the development of agriculture, farmers and rural areas. In this way, farmers can become fair beneficiaries in economic and social development.

Second, we must insist on the government guarantee. It is required to involve the principle of the government's protecting the public service, change the different development strategy between urban and rural, and involve the basic role of the market in allocating resources. In accordance with the principle of fairness in urban and rural areas, the public service policies shall be developed so as to make up for the shortcomings of market mechanisms and promote sound and rapid development of rural areas.

Third, adhere to social equity. In the formulation of public service policies, we must adhere to the principles of social justice. The government functions should be transformed to provide public goods and services, increase investment in public goods in rural areas, and establish a public service system covering the urban and rural areas to reduce disparities.

Fourth, we must insist on promotion with common efforts. It is required to implement the concept of governing for the people and involves: 1) adhering to the multi-sectoral cooperative promotion; 2) improving public services in rural areas as a top priority; and 3) coordinating efforts from all sides and integrating various resources. All of these measures can effectively change the management system and work solely on agricultural population department.

5. Main tasks for promoting the balanced allocation of public resources and improving public services in rural areas

Regarding establishing a public service system featuring "benefiting all, equalization, integration", its key points and difficulties lie in rural areas. Equalization of basic public services in urban and rural areas can not be in full swing or put in place once and for all. It must arrange the priority order according to different phases and regions, concentrating financial resources on rural basic public services. These are mostly needed by farmers, to benefit a wide range and have strong publicity. According to the corresponding requirement of "improving people's livelihood, establishing and improving the basic public service system" in the Planning Framework in the Twelfth Five-Year Plan, the main tasks of improving rural public services include the following five areas:

1) Promote the balanced development of compulsory education in urban and rural areas

It is required to improve compulsory education conditions, so that the conditions in county schools are roughly equal in quality. It shall also establish and improve high school education funding systems, and encourage qualified areas include high school education into the compulsory education range. This goal strives to be the first to achieve the comprehensive free secondary vocational education in rural areas and to achieve the basic goal of universal high school education in rural areas in the "Twelfth Five-Year Plan" period.

In popularizing high school education in rural areas, we must adhere to zoning plans, always put the development of rural secondary vocational education as a priority. This means consolidating effectiveness of the existing subsidy policy in secondary vocational education. We will continue to implement the arrangement of special funds by the central and local governments according to different regions and in proportion. We also will gradually make the free policy to benefit all rural secondary vocational school students.

Vigorous support shall be given to education development in the poverty-stricken areas and ethnic minority areas. This focuses on strengthening government expenditure responsibilities across all levels, establishing a standardized rural education payment transfer system.

2) Improve rural medical security level

First, we shall fully implement and consolidate the new rural cooperative medical system in the rural areas nationwide. The focus is to improve the level of financial assistance and funding criteria, with an appropriate increase in the overall planning level and effective consolidation of farmers' participation rate.

Second, serious illness hospitalized protection is transferred to the method by taking into account the outpatient basic medical care for the serious illness, expanding the benefiting perspective of the insured farmers and steadily increase farmers' benefit rate.

We shall also strengthen the supervision and management of new rural cooperative medical institutions so as to effectively control medical costs. Third, it is asked to further improve the rural medical assistance system to provide grants for vulnerable groups and poor farmers to participate in the medical insurance Fourth, the plan also needs to promote the basic medical insurance system to have the coordinated development and properly solve the problem of migrant workers' basic medical insurance. The plan needs to conduct the timely development of various forms of rural medical mutual aid activities and commercial health insurance for the needs of farmers. Fifth, we shall also improve the rural three-tier health service network, providing farmers with secure affordable basic medical services, strengthen rural maternal and child health and fully implemented rural women's in-hospital maternity benefits policies. We shall put prevention in the first priority, increasing controlled efforts in endemic, communicable and zoonotic diseases.

3) Improve the rural minimum living guarantee system

First, we shall determine the scientific and standardized security standards. The rural and urban minimum living standard shall be linked to the level of economic development it needs to increase central and provincial financial subsidies, and continuously improve the level of security standards and subsidies. Second, we will also strictly determine security objects, enabling the rural poor people to enjoy the basic right to life with the government's help.

4) Expedite the settlement of farmers' problems of difficult and unsafe drinking water

During the "12^th Five-Year Plan" period, the aim was to further increase support for rural drinking water project construction, and to strive to achieve the basic realization of safe drinking water for rural populations. First, we must focus on increasing investment. Currently, the populations with poor water quality that does not meet the standards are mainly distributed in the Midwest regions: fluoride water mainly in the Huang-Huai-Hai, Northwest and Northeast regions; high-arsenic water mainly in Inner Mongolia, Shanxi, Xinjiang, Ningxia, Jilin and other places; and brackish water mainly in the Huang-Huai-Hai, Northwest and some coastal areas.

To speed up construction of rural drinking water safety projects, we should give priority to safe drinking water in less populated nations, reservoir resettlements, schistosomiasis areas and rural schools. Second, it is required to adjust measures to local conditions in a results-oriented way. We shall strengthen water purification, and use appropriate technology to ensure drinking water meets quality standards. For fluoride water, high-arsenic water and brackish water areas, it is advised to use special water treatment measures. Scattered farmers living in mountain area are suggested to use rainwater harvesting, tube wells and other decentralized water supply projects to solve water shortage problems.

The places with better conditions may develop centralized water supply. Economically developed areas may actively promote the same network and the same quality. Third, we should combine prevention and treatment. We shall also ensure the protection of drinking water sources, in particular to control the mining, industrial and other pollution. We also should strengthen the comprehensive improvement of rural sanitation, and guide farmers in scientific application of fertilizers, pesticides; and improve sewage, waste disposal, and reduce non-point source pollution.

5) Promote rural environment comprehensive improvement

In recent years, industrial and urban pollution has spread to rural areas, and the industrial emissions and pollution in rural areas continues to show a rising trend. Chemical fertilizers and pesticides have a high strength application and great loss, thus making arable land and groundwater contaminated. Livestock and poultry pollution is serious. Most of the garbage dumps in rural areas are open, with open sewage leading to serious deterioration of environmental quality. More than 60% of the crop straw is not effectively utilized, which has become an important factor in pollution.

A variety of agricultural pollution, household garbage pollution, and industrial pollution causes rural water and soil deterioration leading to health issues. To improve the rural environment management planning, we shall increase investment in rural environmental governance, increase industrial pollution control efforts, invest in more rural non-point source pollution control efforts, and promote contiguous rural environment remediation.

6. Policy idea on promoting the balanced allocation of public resources and improving public services in rural areas

It is required to thoroughly reform the urban-rural dual structure in allocation of public resources. This will require restructuring urban and rural distribution relations in public resources, and will need investment to expand the public finance coverage in rural areas.

1) Conduct a substantial increase in the scale of capital investment of finance in rural public services and infrastructure

Measuring the gap of per capita expenditure is a core indicator measuring urban and rural public service equalization. more conscious, more substantial adjustments shall be made to national income distribution pattern and the national fiscal expenditure structure. This promotes public finances' balanced allocation of resources between urban and rural areas, and improves the finance security level for rural basic public services and infrastructure.

Plans also need to gradually raise the proportion of finance spending on "agriculture, farmers and rural area". It shall also ensure that the incremental portion of infrastructure investment in the central government budget is mainly used for agriculture and rural areas. We need to promptly formulate and improve relevant laws and regulations, clearly defining the connotation of spending on "agriculture, farmers and rural area" and strengthen legal constraints.

With the enhancement of financial resources, we need to pay close attention to the division of powers between central and local power in supporting agriculture. This will improve the transfer payment methods and establish a system of financial support for agriculture

Substantial evidence proves that behind a serious shortage of financial support for agriculture, the performance of financial support for agriculture is worrying. Various departments and regions tend to focus on the acquisition of financial capital, ignoring the results from the use of funds. If the financial public expenditure is lacking support from performance evaluation, it will inevitably encourage all regions and departments to pursue maximized budgets. This would lead to the rising costs of public goods, as well as the spread of corruption. Therefore, improving the performance of capital allocation and management of financial support for agriculture is more difficult and more important than simply increasing investment.

To improve the internal restraint mechanism of financial capital allocation, it requires focusing on pre-audit surveys, tracking inspections and monitoring. It requires making the integrated use of inspections, investigations, auditing, supervision, feedback and other work methods, and continuously improve the performance of financial supervision. It also needs to take steps such as operating by the people with public support, replacing subsidies with awards, and using in-kind as funds etc. These steps can guide farmers and rural collective organizations in building small water conservancy, constructing rural roads and other small micro rural infrastructures. On the current pilot basis, we need to further expand the scale and scope of consolidation and actively innovate integrated approaches. In accordance with the principle of "stock optimization, incremental focus, internal and external budgets co-ordination, and cross-sectoral integration", we shall conduct a comprehensive sorting of existing special funds. We shall further improve and perfect the existing policy system, coordinate allocation and use of various special funds. This will strengthen the organic link between the funds, so that agriculture funds complement each other, with coordinated arrangements and focused investment.

2) Protecting all levels of governments' land in the development of rural public services and infrastructure

The Central budget investment is limited, so we must broaden the investment channels. Governments at all levels should increase land revenue to be used in agriculture and rural infrastructure. In a certain sense it can be said that the land leasing revenue comes "from peasants", and is used correspondingly in the "agriculture" as a matter of course. On one hand, it needs to make a substantial increase in land revenue for rural social undertakings, especially the share of social security. On the other hand, it requires a substantial increase in land revenue in the share of rural infrastructure. If the land transfer income is used with priority for agriculture and rural area, rural public services and infrastructure backwardness will be greatly improved.

Currently, many urban and rural are testing area for urban-rural overall development. They mainly rely on land revenue to promote the equalization of public services and provide support. It is necessary for homestead and village renovation to arrange space for the industrialization and urbanization, but also increase benefits for farmers. In the implementation of rural land remediation process, we should adhere to the two "maximums": 1) the construction land saved shall be left to farmers to the maximum; and 2) the farmers should enjoy the benefits from maximizing development and operation of these construction sites. To further regulate rural land remediation, we shall rely on the development and transfer of the collective management construction to inflow capital. The investment will go to rural public services and infrastructure leverage.

3) Enhance the role of financial policy, innovate rural infrastructure financing mechanisms

Agriculture and rural infrastructure construction requires long-term, low-interest capital investment, and these inputs cannot be met through financial institutions in general. Financial investment provides long-term low-interest financing for agricultural development and rural construction, a common practice in many countries. For example, the Japanese government funds served as seed purchase, through agriculture, forestry, fisheries, finance, public treasury, commissioned branch treasuries or other financial institution to conduct the long-term low-interest financing for a construction project, converted from financial support to financial assistance, thus the same money playing a greater role through recycling.

Meanwhile, Japan, through national and prefectural interest subsidies and credit guarantee measures, motivate the long-term funds in the private financial institutions to finance for the medium and short-term working capital of farmers. with fewer subsidies and guarantees and the use of leverage, it achieved substantial and long-term capital investment in agricultural development. In case of insufficient investment in infrastructure in the central government budget, we should involve the role of policy-oriented financial institutions, enabling agriculture and rural infrastructure. We should accelerate the establishment of a sound investment mechanism in fiscal and financial combination through interest subsidies or the leverage of using credit guarantees.

4) Improve farmers' freely-decision-making supply mechanisms for the community's public goods

Whether the government-provided public services can meet the actual needs of the majority of the rural population is a main principle measuring the effectiveness of public finance coverage in rural areas. Therefore, the supply reform of public services in rural areas needs to continue to push forward the reform of rural grassroots democracy and improve the investment decision-making process of public services in rural areas. The investment decision-making process transforms from the "top-down" to "bottom-up", which is a demand desire expressed mechanism reflecting the general farmers' needs for public services.

Institutionally, we shall establish a system that decides investment orientation and the scope of public services by farmers and the rural interior needs, while establishing a system that public services supply is determined by the internal demand.

We shall do the following: strengthen township government's social management and public service functions; improve funding for the financial security mechanisms for the village-level organizations' operation; and enhance the village public affairs management and public service delivery capabilities. This works to strengthen the construction of rural social organizations and enable rural internal autonomy power to play its due role in the provision of public services.