Global Poverty Reduction and Development Forum-2013-Chapter V

Chapter V: Fiscal Policy of Promoting Urban-Rural Integration and Poverty Reduction

 

Su Ming

Institute for Fiscal Science, Ministry of Finance

 

1. Main Policies and Effects of the Fiscal Support for Urban-Rural Integration and Poverty Reduction in the last 10 Years

The fiscal policy regarding "three-dimensional rural issues" actually means the policy of supporting and promoting urban–rural integration, which is an important part of the national fiscal policy and a significant financial guarantee for promoting the coordinated development of rural society and economy. Since the beginning of the new millennium, the policies of the national budget for supporting the "three-dimensional rural issues" have allowed an increasingly wide scope for innovation and strengthening development, and brought about more and more benefits to farmers. In general, "three-dimensional rural issues" support policies recently issued by the national budget in the last ten years contain eight main points:

1) Reform of taxes and administrative charges in rural areas

Since 2000, the "three-cancellation, two-adjustment, and one-reform" policy has been implemented in the reform of taxes and administrative charges in rural areas of China. From 2004, the reform of taxes and administrative charges in rural areas of China has entered a new stage, and the "three-cancellation" policy has been further carried out, namely, to cancel the agricultural specialty taxes, including the agricultural tax and animal husbandry tax, but except for the tobacco leaf tax. From 2005, the agriculture tax has disappeared completely in China. The reform of taxes and administrative charges in rural areas has readjusted the interest distribution relationship among the state, the collectives and the farmers, and has made up for the spending gap at the grassroots by means of financial transfer payments from the central and provincial budgets. Thus, the farmers nationwide can enjoy a tax reduction of 133.5 billion Yuan each year.

2) Implementation of the "four agricultural subsidies" for farmers

The "four agricultural subsidies" refer to direct subsidies for grain producers, subsidies for purchasing certified seeds, and agricultural machinery and tools, and general subsidies for purchasing agricultural supplies. The above policies have been implemented from 2004, in which year the national financial investment totalled over 13 billion yuan, and had been up to 140.6 billion yuan by 2011. It played an important role of increasing farmers' income, stimulating grain production, and promoting the improvement of agricultural production conditions.

3) Establishment of the protection system for agricultural support

From infrastructure construction to improvement of agricultural science and progress in technology, from the training of farmers to farmers' professional cooperative organization development, from animal and plant epidemic prevention and control to quality safety systems for agricultural products, the public finance has strengthened the support for modern agricultural construction continuously by means of investment, allowances, interest subsidies and tax preferences, etc. In 2012 the funds for agricultural production from the central finance alone were up to 472.4 billion yuan. Meanwhile, the public finance continuously strengthened its support for ecological construction and protection of farming and forestry. In the last decade, the investment for project construction regarding natural forestry protection and returning farmland to forests or grassland coming only from the central finance amounted to more than 400 billion Yuan. In 2011, the central finance supported and launched the reward-compensation mechanism for grassland ecology protection, initiating massive grassland ecology and environment protection (Zhang Yansong, 2013).

4) Infrastructure construction in rural areas

In recent years, as our country has attached more importance to governmental public investment in villages, infrastructure construction such as water conservancy and roads had been obviously expedited, which not only improved the people's livelihood needs in villages, but also hastened greater investment and consumption demand. During the "11th Five-year Plan" period, the central government invested 197.8 billion Yuan in rural highway construction, up by 30% per year on average. By the end of 2011, the mileage of the national rural highways (including county roads, township roads and village roads) reached 3 564 000 kilometers, 1.7 times that of a decade ago (2002) with an annual increase of 11.5% on average; to enhance the investment for the construction of irrigation and water conservancy systems and to accelerate the improvement of its weak links, in 2011, the Central Committee's Document No.1 clearly put forward a policy requirement of taking 10% of land transfer revenue for the construction of irrigation & water conservancy, and at the same year, 27 billion yuan was collected for the construction of irrigation & water conservancy systems. From January 2012, central finance has made overall use of the construction funds for irrigation and water conservancy taken from land transfer revenue in different regions at a proportion of 20%, mainly supporting the construction funds for irrigation and water conservancy in the main grain producing areas, central and western regions, old revolutionary base areas, minority regions, border areas, and poverty-stricken areas by investing over 110 billion yuan, up by 22% on an annual basis, and maintaining the good momentum of fast growth in the public investment of irrigation & water conservancy construction.

5) Guarantee mechanism for rural compulsory education funds

Since 2006, in accordance with the overall idea of "clearly defining responsibilities at all levels, which the central the local governments share in together, enhancing financial investment, improving the level of guarantee, organizing and implement them step by step", our country has comprehensively brought the rural compulsory education into the guarantee scope of public finance, stably increased the financial investment, and gradually established the guarantee mechanism for long-term funds for rural compulsory education with the funds shared in as per proportions and items by the central and local governments. In 2007, the policies benefiting people of "free incidental expenses, free textbook fees, gradually give allowance as living expenses of boarding-school students" were comprehensively extended to nearly 150 million students in 400 000 rural primary and secondary schools of the central and eastern regions, realizing the nationwide all-round establishment of the guarantee mechanism for rural compulsory education funds. In October 2011, the State Council launched the nutrition improvement plan for rural compulsory education students, and the central finance allocated over 16 billion yuan in special funds each year, providing a 3 yuan per day nutritional meal allowance for more than 26 million rural compulsory education students in 680 national pilot counties.

6) New-type rural cooperative medical care system

The new-type rural cooperative medical care system refers to the farmers' medical mutual aid system. The farmers' voluntary participation is organized, led and supported by government, funded by the individuals, the collectives and the government, and dominated by a comprehensive arrangement for serious diseases. Since 2003, the new-type rural cooperative medical care system has been implemented on a trial basis, comprehensively solving the problem of the difficulty for farmers and the high cost in getting medical treatment so as to realize a "no turn-away" policy. From 2003 to 2011, the national finance allocated a total of 472.4 billion yuan in subsidy funds for the new-type rural cooperative medical care, realizing the comprehensive coverage of the new-type rural cooperative medical care system. In 2011, the new-type rural cooperative medical care system covered 2 637 counties nationwide with 832 million people participating. The total amount of funds for the system being 204.76 billion yuan, per capita funds being 246.2 yuan, and the population compensated and benefited being 1.315 billion.

7) Rural social security system focusing on rural subsistence allowance, old-age endowment and reduction

From 2007 to 2011, the national finance had altogether allocated 181.35 billion yuan in funds to support the establishment and perfection of the rural subsistence security system. By the end of 2011, the rural subsistence security system in our country involved 53.135 million people and 26.626 million rural households, up by 53.9% and 69.3% respectively from 2007 when the system was established; the coverage of the system has promoted the new-type rural social endowment insurance, and facilitated the significant change of farmers' old-age care methods, realizing "security for the elderly". By 2011, in 1 914 counties (cities, districts and banners) in 27 provinces and autonomous regions and in parts of districts and counties in 4 municipalities nationwide pilot areas have been established, covering 60% of counties and cities. In these, the national new-type rural social endowment insurance has been developed. From 2009 to 2011, the national finance had allocated social endowment insurance subsidy funds of 104.7 billion Yuan in all for urban–rural residents. On the platform of the new-type rural cooperative medical care system, China has gradually established the medical assistance system for poor rural residents, realizing "aid provided when in difficulty". From 2003 to 2011, the national finance had allocated subsidy funds of 43.4 billion Yuan for rural medical assistance, establishing the rural medical assistance system.

8) Establishment of basic guarantee mechanism of financial resources for county-level governments

Since 2005, in order to solve financial difficulties in counties and townships, the ministry of finance has established a reward and subsidy mechanism for counties' and townships' finance, with 15 billion yuan in 2005, 23.5 billion yuan in 2006 and 33.5 billion yuan in 2007. The total financial investment exceeded 70 billion yuan, bringing along the counterpart funds of 80.8 billion yuan provided by local governments. 791 financially strapped counties nationwide had a total financial increase of 129.8 billion yuan with a growth of 164.1 million yuan in each county (city) on average. By 2007, the number of nationwide financially strapped counties was reduced to 27 from 791 in 2005, and the years' financial difficulty situation of counties and townships was obviously alleviated. Since 2010, the central finance has comprehensively laid out the establishment and perfection of the basic financial guarantee mechanism for county-level governments, and allocated the reward & subsidy funds of 68.2 billion yuan that year to strengthen the financial guarantee for basic public services provided by county-level governments. In 2011, the central finance provided the reward & subsidy funds of 77.5 billion yuan for basic financial guarantee mechanism for county-level governments, up by 13.6%. In 2012, the budget even exceeded 100 billion Yuan, up to???107.5 billion Yuan with an increase of 38.7%.

Thus, it can be seen that in recent years, the fiscal policy of agriculture, rural areas and farmers has a rich content. The basic policy directions are: on the one hand, to cancel taxes and administrative charges to vigorously reduce the burden for farmers; on the other hand, to increase the investment for rural social and economic development, to create better conditions for the development of agriculture, rural areas and farmers; meanwhile, to adjust the fiscal system and turn the key of financial distribution to the grassroots to serve agriculture, rural areas and farmers directly. In terms of financial investment, the central finance allocated a total of over 6 trillion yuan for spending on "three-dimensional rural issues" from 2003 to 2012. Within that, from 2007 to 2012, the central finance invested 4.9 trillion yuan on "three dimensional rural issues" with an average annual growth of more than 23%, 6.6% higher than that in the corresponding period. The proportion of the "three dimensional rural issues" spending taking up the total central public finance expenditures was increased to 19.2% in 2012 from 14.6% in 2007, up by 4.6%. It exhibits that the stable growth mechanism of financial support in agriculture has been taking shape, and also reflects the policy requirements in that the national finance have laid emphasis on agriculture, rural areas and farmers and a people-oriented approach.

The national finance's high investment in the "three dimensional rural issues" played a positive role in the rural development of our country. As the rural economy has developed fast and the comprehensive productive capacity of agriculture has been improved continuously, the output of the main farm products, such as grain, cotton and sugar crops, reached the world's top level; the great improvement of farmers' income and consumption levels and the reduction in the Engel coefficient showed that the living quality of farmers has been enhanced significantly; the poverty alleviation in our country has made a historic breakthrough and according to the original poverty alleviation standards, the incidence of poverty in rural areas has dropped to below 3% from 30.7%; the proportion of urban residents have risen to 52% in 2012 from 17.92% in 1978. Some villages of developed regions in our country have already taken the lead in moving towards modernization, and the coordinated urban–rural development pattern has already begun to take shape. The profound changes in China's rural society and economy basically result from the national economic development and the enlargement of the economic aggregate, and is also closely related to the application of the national fiscal policy of the "three dimensional rural issues".

2. Current Primary Contradictions of Urban-Rural Integration and Poverty Reduction in China

From a macro perspective, the reform and development of rural society and economy have achieved remarkable effects, but during the industrialization and urbanization, the current distribution relationship between workers and farmers, cities and townships, and of national income has not yet been systematized fully; meanwhile, the pattern that the comprehensive national resource allocation, like funds, policies and system, has been turned mainly to cities still exists; namely, the achievements of the overall national reform and development are not distributed equally between cities and townships, and between workers and farmers. Here is a general analysis of the primary contradictions and problems.

1) The situation of weak agricultural foundation has not been changed fundamentally and the development of agricultural productivity is still lagging

In recent years, the main agricultural products such as grain in our country have achieved a rapid growth, basically meeting the needs of the market. However, at the same time, it must be noted that the fastest period of economic development took place in these years, while living standards improved and urbanization was promoted in our country. The social needs for the main farmer products, like grain, have been increasing rapidly. The situation of weak agricultural foundation in our country has not been changed fundamentally and agricultural productivity development still apparently lags behind other sectors. With a background of the strong demand for agricultural products in recent years, the indication that the growth of the main farmer products' supply such as grain has not caught up with the needs of economic and social development and the increasing speed of people's living standards has emerged already. The import quantity of the main agricultural products, like grain, cotton, oil, sugar, meat and milk, has increased gradually. Based on the calculation and estimation of related experts, if calculated according to the yield of agricultural products in per unit area in our country, at present, the quantity of the main agricultural products such as grain and oil has been equivalent to that our country used more than 600 million mu sown areas of farm crops in other countries. Under the background of economic globalization, making rational use of international and domestic resources and markets is conducive to making up for the shortage of agricultural products in our country and to strengthening the economic cooperation with agricultural product export countries. However, as a populous nation, China must limit the import of grain and other main farm products to avoid the influences on the national grain security and the general situation of economic and social reform, development and stability.

2) Changes of industrial structure and employment structure are out of line and the task of transferring surplus rural labor force is still arduous

From the international experience, the change of industrial structure will cause the variation of employment structure with similar changing speeds, which is the necessary prerequisite of a stable and coordinated development of society and the economy. Since the 1980s in our country with the promotion of reform and opening up to the outside world, the proportions of three industrial structures has changed significantly, specifically, the primary industry took up 10.0% in 2011, down from 30.1% in 1980, and the secondary industry accounted for 46.6%, down from 48.5%, while the tertiary industry constituted 43.4%, up from 21.4%, which indicates that the industrialization in our country has made great progress.

But the problem is, the employment structure in our country has serious defects, specifically, the primary industry takes up an overly large proportion and the employees of the tertiary industry occupy a smaller part. Around 2009, the employees in the primary industry of developed countries amounted to 1–4% generally, while those in the tertiary industry accounted for over 70%; the employees in the primary industry of the relatively developed developing countries took up around 20% generally, while those in the tertiary industry of most such countries were above 60%. As for China, in 1990, the employees in the primary industry were over 60%, while those in the tertiary industry were only 18.5%, even by 2011, the employees in the primary industry were still high up to 34.8% while those in the tertiary industry occupied 35.7% only.

It shall be noted that in the over 30 years of reform and opening up to the outside world, with the changes of economic development and industrial structure, the employment structure in China has varied dramatically, marking that the outward transfer of surplus agricultural labor force achieved a historic breakthrough –specifically, in 2010, the labor force engaged in agriculture was 292 million, down by 99 million from 391 million in 1991, with an average annual decrease of 4.95 million. It played an important role in improving the efficacy of agricultural scale management & production, boosting the increase of farmers' income and promoting the coordinated urban–rural development. However, compared with overseas countries, China's employment structure still lags far behind of the industrial structure. In 2011, the labor force engaged in primary industry took up 34.8%, up 25% from 10% of the primary industrial output, exhibiting that in our country, there are still a large number of farmers and people engaging in agriculture; thus, the task of transferring outwards the surplus agricultural labor force in the middle and long term is still difficult and arduous. According to related research and mode measurement, with the economic growth and urbanization development, the agricultural labor force still needs to be transferred to non-agricultural industries, and by the end of the "12^th Five-Year Plan", those engaged in agriculture will be around 260 million, dropping by 33 million from that in 2010, and by 2020, only 225 million, and around 200 million by 2025, about 178 million by 2030. It indicates that the task of transferring the surplus agricultural labor force in the middle & long term is arduous, in that there are around 8.6 million to 9 million people in the rural labor force needing transfer each year during the "12^th Five-Year Plan". The pressure of transferring the rural labor force can be alleviated only after 2020.

3) Macro income distribution is imbalanced and the income gap between urban and rural residents is still large

Since the reform and opening up to the outside world and with the development of economy, the national distribution policies have been adjusted significantly. One basic policy direction is to change the policy of "excessive accumulation and low consumption" implemented in the previous long-term policy, gradually increasing personal income share, and by 2011, the personal income had grown to 70% of GDP from 50% in the early 1980s. It is clear that this was the correct choice, for it has performed a significant role in dealing with the relationship between accumulation and consumption, improving personal income and living standards, and giving full play to developing the economy in all areas of society. However, the problem is, during the widespread enhancement of personal income distribution, the urban and rural residents have been distributed in an unbalanced manner and the current income gap between them is still large. The proportion of the urban–rural income in our country was 2.57: 1 in 1978, 1.71:1 in 1984, 2.47:1 in 1997, 2.65:1 in 1999, 3.23:1 in 2003, 3.22:1 in 2005, 3.33:1 in 2007 and still high at 3.13: 1 in 2011. It can be said that currently the gap between urban and rural income is even larger than that in the initial stage of the reform and opening up to the outside world (see Table 5 for details). If considering the distance between urban and rural areas in aspects such as education, health, and social security, the actual distance between urban and rural areas is far larger than that between urban–rural incomes. The enlargement of unfair income distribution for urban and rural incomes during China's structural transformation further demonstrates the hypothesis on the reasons and nature of income distribution changes during development raised by Kuznets (1955, 1963) and (1957), as well as the results observed by Chenery's structural transformation model.

4) Supply level of basic public service is not high and the supplies among regions, urban and rural areas and people are in serious imbalance

In terms of the urban–rural situation, the rural public service lags behind seriously with poor accessibility. In the area of compulsory education, in 2008, the average education funds for students in ordinary primary schools and junior high schools in cities were 1.2 times and 1.3 times respectively hat of people in villages, and the highly educated teachers in ordinary secondary schools of cities were almost twice those in villages. With respect to medical treatment and public health, in 2008 the number of hospital beds for every 1000 people in cities was 4.22 times of that in villages, and the number of medical personnel was 2.52 times that in villages, while the mortality rates of infants, children below 5 years old, and pregnant women and Puerpera were respectively 2.8, 2.9, and 1.2 times of those in cities. Also, the social security level in villages is far lower than that in cities.

In terms of the regional situation, public service and economic development levels have a positive correlation, but the distance of public service levels among different regions is larger than the corresponding distance of economic levels. Over the recent years, the per capita GDP difference coefficient among regions has been reduced gradually, but the difference coefficient in public service is still large. In 2008, the difference coefficient of the financial expenditures of the per capita local education, social security and employment, and medical treatment and public health was 0.529, far higher than that (0.267) of the corresponding per capita disposable income of urban residents. In 2009, the highest provincial per capita financial expenditure on education was 3.95 times that of the lowest, and the highest provincial per capita financial expenditure on medical treatment and public health was 4.75 times that of the lowest. Furthermore, at present, the highest provincial average education funds for students in primary schools are nearly 11 times that of the lowest, and for the fiscal subsidy standard of new-type rural cooperative medical care, there is a difference of over 4 times at most among regions. All these data reflect the giant distance among regions.

In addition, the gap among different groups of the public is large, namely, the rights and interests of basic public service for the urban–rural low-income families and social vulnerable groups still cannot be fully guaranteed. In 2006, in the "Opinions on Solving the Problems of Rural Migrant Workers" issued by the State Council, some guidelines were put forward regarding the rural migrant workers' income, employment, labor protection, social security, reform in household registration management system, etc. The implementation of these policies and measures has improved, to some extent, the general situation of rural migrant workers. However, comparing with the urban permanent population, there still exist large gaps in the wage income, basic public service and other aspects concerning rural migrant workers. The coverage of basic social security for rural migrant workers is on the low side. Based on the survey data issued by the Chinese Academy of Social Sciences, at present, the proportions of rural migrant workers' endowment, unemployment, medical treatment and industrial injury as well as mutual and cooperative insurance for female workers are respectively 33.7%, 10.3%, 21.6%, 31.8% and 5.5%; far lower than those of urban residents. The rates of participating in the supplementary corporate insurance, mutual and cooperative insurance for employees and business insurance are even lower, concretely speaking, 2.9%, 3.1% and 5.6% respectively.

3. Basic Ideas of Finance Support for Urban-Rural Integration and Poverty Reduction in the Short and Middle Terms

1) Government shall turn the key of investment in infrastructure to rural areas

The rural infrastructure construction relates to the improvement of rural production and living conditions and is important content for the construction of a new socialist countryside; thus it shall be viewed as the key point of the national infrastructure construction. Firstly, adjust the investment structure of infrastructure construction in budget. According to the requirements for turning the construction focus to villages and using most investment within the national budget for rural areas, it is recommended that the proportion of investment in infrastructure for agriculture and villages shall be enhanced within the future budget period with no less than 50% of incremental investment. Based on this, take effective measures, explore the efficacious mode of leading farmers and social capital to take part in the rural infrastructure construction. Secondly, strengthen the rural public infrastructure construction that farmers need, such as water, electricity and roads. Solving the practical problems closely related to farmers, like water and electricity shortages and poor transport, shall be the main point, so as to expedite the construction scheduling. It is not only conducive to the development of backward rural areas, but also a vital part of expanding domestic demand and boosting economic growth, while promoting the coordinated development between farmers and industrialization and urbanization. Thirdly, strengthen the small and medium-sized infrastructure construction at below-county level. In combination with the experience of "six categories of small projects" construction (namely, water-saving irrigation, water supply for humans and livestock, country roads, rural biogas, rural hydropower, rangeland fence, etc.) and the method of changing small and medium-sized agricultural & rural infrastructure depending mainly on farmers' labor & investment, integrate gradually the small and medium-sized infrastructure construction at levels below county into the scope of the investment in infrastructure of governments at all levels. Fourthly, during the new period, adapt to the pressing needs of farmers for improving the infrastructure in the aspect of policy direction, and further enhance the "one discussion for one project" reward & subsidy of finance for rural public welfare establishments. On the premise of the specified provisions, develop the construction of public welfare undertakings of "one discussion for one project", adhere to a people-oriented approach and respect for farmers' rights, spare no effort to solve the most important issues and aim at livelihood issues of farmers in focus areas, such as remote areas, ethnic regions, border areas, alpine regions and poverty-stricken areas. Financing shall enhance the reward and subsidy and lead enterprises and society to offer assets on the basis of farmers' needs, making efforts to perfect the multiple investment mechanism of the construction of public welfare undertakings at village level. Fifthly, attach importance to and support the rural public environment improvement. Currently, the key emphasis of work concerning the environment in rural areas includes garbage clearance, sewage disposal, etc. This is new content for rural infrastructure construction and also the objective requirement for beautiful countryside construction. Attach importance to and support the rural public environment improvement on the basis of supporting the rural renovation planning formulation. It is suggested that the central budget and all levels of local financing should increase its special investment in rural public environment improvement by means of substituting subsidies with rewards and compensating for funds with objects, leading farmers to construct beautiful homeland.

2) Make efforts to vigorously perfect agriculture-supporting policy

--Ensure the steady growth of financial expenditure for agriculture. China's national conditions determine that the government is all the time an important channel of investing in agriculture with the main means of the financial expenditure for agriculture. Therefore, to reinforce the agriculture-supporting function of government and perfect the agriculture-supporting policies and means of finance, first and foremost, the financial investment in agriculture shall be increased, which is the necessary condition for promoting the steady development of agricultural production and then realizing the national agricultural development. In recent years, the investment in agriculture from national finance has grown steadily, but the financial expenditure on agriculture is still far from the demanded expenditure for agricultural development. Considering the backward agricultural production conditions and the future development needs, a basic direction of policy of financial support for agriculture in future is: to take effective measures to enhance the proportion of financial expenditure for agriculture. Firstly, ensure investing more additional national finance in agriculture. In these years, the national financial revenue has increased by nearly one trillion yuan annually, so it is recommended that 10–15% of the additional national financial revenue shall be used for agriculture, which is an important measure to strengthen investment in agriculture. Secondly, it is advised to collect funds to support agriculture by means of land transfer net revenue, budget revenue of state-owned capital operation, etc. In 2011, the central government clearly stated to take 10% of land transfer net revenue for construction of irrigation and water conservancy, but it is suggested that land management was brought into the special support scope with a further increase of consolidated proportion to 15%. In addition, take a certain proportion of the central and provincial budget revenue of state-owned capital operation as special funds for agriculture. Thirdly, issue the agricultural investment law as soon as possible, integrating the agriculture-supporting behaviors of governments at all levels into legal norms. From the future trend, to better realize the control target of supporting and protecting agriculture and change the random behaviors of local investment in agriculture, the agricultural investment law needs to be established and issued as quickly as possible. In the law, the behaviors of investment in agriculture of the state (including central and local governments) shall be the main objects regulated; meanwhile, the agriculture-supporting responsibilities of all levels of governments shall be identified and the quantitative limit of investment in agriculture specified, which will definitely promote the code of conduct of the whole agricultural investment subject and reinforce the oriented function of the governmental investment subject.

--Clarify the direction and main points of financial support for agriculture. Firstly, invest more in agricultural infrastructure construction, including water conservancy facilities, farming and forestry environment, territorial management, etc. Secondly, support the adjustment of the agricultural structure. China's agriculture has entered a new developmental stage and is facing strategic restructuring, that is to say, to adjust the agricultural production structure by producing competitive agricultural products, developing animal husbandry and the forestry and fruit industries, boosting the value increment of agricultural products' processing and transformation, and positively developing small town and township enterprises, etc. For this, financing shall strengthen supports for aspects such as the "Seed Project", fine breed for animal husbandry, high quality feed, regionalized high quality agricultural product bases, industrialized leading enterprises, and returning farmland to forest or grassland. Thirdly, perfect the socialized service system for agriculture. There are 230 million rural households in our country with small management scale and high cost of farm products in urgent need of the perfection of socialized service system and the improvement of services before, during and after production. In this respect, financing shall invest more in meteorology, by establishing and perfecting the weather forecast service for all kinds of special natural disasters; strengthen the investment in epidemic monitoring of diseases and pests to reduce farmers' losses; enhancing the investment in the establishment of information networks and marketing organizations for agricultural products, gradually establishing the information network and marketing organization for agricultural products covering national cities and villages and connecting international markets; supporting farmers' rational storage of grain to alleviate the storage pressure of national grain.

--Perfect agricultural subsidy system. Providing direct subsidies for grain farmers is a significant act of effectively increasing farmers' income and giving full play to farmers' potential, an important means of adjusting national income distribution pattern, a direct realization form of industry re-feeding agriculture, and also a vital innovation in China's agricultural subsidy system. At present, agriculture and the rural economy in our country have come into a new developmental stage, putting forward new requirements for improving the support and protection system for agriculture. It is required to further improve agricultural subsidy system from aspects like scale expansion, standard enhancement, scope enlargement and mechanism perfection. Firstly, with the improvement of the financial level in our country, gradually expand the total scale of funds for direct subsidies and step-by-step enhance the subsidy standard to the level at which the grain-growing costs of farmers can be compensated and appropriate income guaranteed. Secondly, strengthen subsidies for certified seeds and agricultural machinery. Thirdly, further improve each subsidy system for farmers' income such as direct subsidy for grain and comprehensive direct subsidy for agricultural funds. Explore various ways for agricultural subsidies in accordance with the principle of "great stability and minor adjustment". For instance, to encourage farmers to grow grain steadfastly, the subsidies are allowed to be turned to big grain producers appropriately to solve the problem that the farmers can enjoy the "direct subsidies for grain" no matter what they grow, even planting trees, farming fish, and out of cultivation, subsidies aiming at the actual cultivated area of grain only can be given. Fourthly, expand the subsidy field for farmers. Strengthen the subsidies for farmers using different new technologies to quicken the conversion and application of scientific and technological achievements in agriculture. Increase the subsidies for agricultural policy insurance premiums to enhance the agricultural risk prevention ability. Fifthly, reinforce the supervision and inspection of agricultural subsidies to prevent them being intercepted, occupied and appropriated and guarantee that the subsidies can go to farmers.

--Lay stress on giving play to the oriented function of the policy of financial support for agriculture. The application of the policy of financial support for agriculture is not only beneficial to directly increasing agricultural investment, but is conducive to attracting and boosting agricultural investment from the whole society. To improve the attraction of social agricultural investment, it is required to further establish the motivating mechanism of agricultural investment through bringing into play the oriented function of financial support for agriculture. Firstly, adjust and optimize the financial expenditure structure of agriculture, and strengthen the fundamental investment for agriculture so as to create a favorable external environment for the increase in agricultural investment for the main body of social investment. Secondly, the state shall give preferences and rewards for agricultural investment concerning aspects like taxation, subsidy, and discount charges to attract social funds to agriculture. Thirdly, change the financial investment method, reduce the projects directly handled by government, and enhance the subsidies for farmers and projects handled by society. Besides, encourage agricultural profits to be used for agricultural reinvestment by policies and measures such as tax preferences.

3) Establish and perfect the new-type system & policy framework for effective flow and transfer of surplus rural labor force

--Eliminate discrimination to provide a fair employment environment for rural migrant workers. First of all, cancel the unreasonable limitations on the rural labor force's seeking jobs in cities and towns. Nowadays, there are still some unreasonable limitations on the rural labor force's seeking jobs in cities and towns; specifically, some cities limit the industries and craft farmers entering in order to ensure urban residents' employment. Besides, some cities drive the farmers out in a slapdash and crude way. As for the situation that rural migrant workers and urban residents get different pay, malicious wage arrears for the former, etc. still abound. This behavior is not consistent with the principle of fair competition in the market economy, and also do not play a correct role of leading farmers to transfer in an orderly way. Thus, it is required to further improve and regulate the management under government of labor market, clear and cancel the unreasonable policies and discriminatory rules in regions on rural migrant workers' seeking jobs in cities. Secondly, provide equal public service for rural migrant workers' employment in cities and towns. In recent years, the state has carried out positive policies for employment; concretely, a lot of preferential policies in aspects such as career introduction, post training, employment assistance, entrepreneurship support; small-amount credit loans and tax reduction and exemption have been issued and finance invested. However, these policies and funds are used mainly for urban residents' employment in such a way that farmers working in cities seldom enjoy them. The next step shall be to change this kind of practice in such a way that the government shall provide unified, regulated, transparent and fair employment services for the whole society.

--Enhance investment in human capital to vigorously improve comprehensive qualities and employment abilities of rural migrant workers. On the one hand, improve the training for rural migrant workers. In the past few years, the government has made great efforts to provide training for the rural labor force, including a transfer training project, skill and employment training, training for youth, training for women, poverty alleviation training, etc. However, the prominent problems still remain, including: the management system of dispersion and multi-sectoral management cannot form resultant force; the relativity of some training is not high so that training is not appropriate for farmers or for market demand; for the existing institutional loophole and backward management, in some places, the government officials cook the books in combination with the social training agencies to defraud the state of training subsidies. In future, it is required to continue the training for rural migrant workers, and most importantly, change the system with much investment and multi-sectoral management of government. Meanwhile, the financial budget makes uniform arrangements for and determines the new system under centralized management of the competent department for the social security of employment. In addition, establish the training plans truly meeting the needs of rural migrant workers according to different regions. At the same time, strengthen the management and stop the loopholes so as to give play to the improvement of the skills and employment abilities of rural migrant workers through training. On the other hand, develop vocational education vigorously. Our basic suggestions are: adhere to a government-led approach, and the financial investment shall be the main channel of fund guarantee for vocational education. Firstly, establish the system of all investment in basic vocational education for minors being undertaken by government, ensure full funds for basic ability construction, teachers' salaries, public expenditure and living subsidies as well as free tuition, besides, establish an annual stable growth mechanism. Secondly, establish the sharing mechanism of government, industries and enterprises, and society for investment in would-be basic vocational education, in order to form the structure of financial investment led by government and joined by industries, enterprises, society and individuals, also, to set up and improve the restraint mechanism of parties' responsibilities. Thirdly, erect the mechanism of higher vocational educational funds being undertaken by government and society, check and ratify the average training cost for students in higher vocational colleges by categories, and set up the standard of funds being undertaken by the state and individuals. Fourthly, rationally determine the responsibilities for investment in vocational education of the central, provincial, municipal and prefectural governments, undertake the vocational education funds per levels, and establish the stable growth mechanism of investment in vocational education within financial budget. Fifthly, make innovations in transfer payment system of equalization, set up the transfer payment system of equalization of basic vocational education for minors, reform & perfect the distribution factors for transfer payment system of equalization of the current finance, and enhance the equal weight of the basic vocational education for minors.

4) Make innovations in the policy system of the equalization for basic public service in cities and villages

--adjust and optimize the structure of public finance expenditure, moving towards livelihood field and rural areas. Based on the requirements of market economy and the reality in our country, in the future, the basic direction of the structure of public finance expenditure in our country is providing protection and suppression with simultaneous promotion of incremental adjustment and stock adjustment. Only in this way can basic public service have a practical and reliable financial basis. Firstly, quicken the reform of the administrative system, practically solving the situation of a bloated organizational structure, too many people subsided by finance and heavy fiscal burden, so as to maintain the administrative appropriation within a rational scope. Meanwhile, vigorously take further measures to reduce the expenses for overseas trips, vehicles, and receptions. Secondly, perfect the financial investment policy. The finance shall retreat from general competitive fields decisively to change the current situation of over wide financial investment scope. Thirdly, collect financial resources for strengthening investment in livelihood, especially that in basic public service concerning aspects such as education, medical treatment and public health, employment service, social security and ecological environment. Governments at all levels shall allocate the budget preferentially for basic public services and ensure that the increasing range is consistent with the growth of financial resources and adapts to basic public service. At the same time, the investment in livelihood from the central and local finance shall be turned truly to rural areas.

--Identify the key tasks and direction of improving the basic public service level in rural areas. Firstly, promote the balanced development of urban–rural compulsory education to achieve the rough equalization of running conditions of schools in counties and the improvement of the quality of rural compulsory education. Integrate the senior high school education into the scope of compulsory education as soon as possible, further enhancing the popularization of senior high school education in rural areas. Implement free rural vocational education comprehensively, and make innovations in rural vocational education system. Secondly, further consolidate and develop the guarantee level of the new-type rural cooperative medical care system. Establish and perfect the three tiers rural health service network providing farmers with safe and cheap basic medical service and strengthening the health care for rural women and children so as to further improve the basic health service level for farmers. Thirdly, improve the rural subsistence security system. Perfect the rural social reduction system and set up the new-type endowment insurance system of rural society. Enhance the poverty alleviation standard, specifically, carry out poverty alleviation policy comprehensively for the rural low-income population. Fourthly, establish and improve the rural cultural facility network and cultural service mechanism. Develop vigorously non-profit cultural undertakings to promote the prosperous development of rural culture.

 

 

Bibliographies:

1. Chen Xiwen: "Promotion of Urban-Rural Development Integration", published on "Seeking Truth", no.23, 2012.

2. Han Jun, Wang Zhihong: "Research of the Transfer Trend of Rural Labor Force during the 12th Five-year Plan and in the Middle & Long Terms", published on no.106 in 2010 of Survey Research Report of Development Center of the State Council.

3. Han Jun: "Promotion of the 'Three-Dimensional Rural Issues' Theory and System Innovation Creation of the New Situation of the 'Three-Dimensional Rural Issues' task", published on no.210 in 2012 of Survey Research Report of Development Center of the State Council.

4. Zhang Yansong: "Public Finance and Urban-Rural Development Integration", manuscript of Chinese Rural Finance Seminar Forum in 2013.

5. Su Ming, Zhang Licheng: soft science subject of "Research on Support of Public Finance for the 'Three-Dimensional Rural Issues' Policy in New Period" in 2012, Ministry of Agriculture

6. Su Ming: "China's Inclusive Development and Fiscal policies", published on the "Research Report" of our institute, no.111, 2012.