Some economists called for recently that the central government should find ways to inspire non-governmental investment and cheer up farmers' buying sentiment to counteract the looming deflation and maintain a sustainable development.

　　Despite a brilliant 7.8 percent growth of the gross domestic product during the first half-year, China still has not successfully shaken off the annoying bite of a deflation beginning since late 1997.

　　Characterized by a pervasive glut in the market, the deflation seems to be gripping harder as prices keep inching down in nearly eight months in a row, driving away the thin air of euphoria among economists about the seemingly rosy-up Chinese economy in 2001.

　　The consumer prices index in June dropped 0.8 per cent on average across China, compared with the same period last year, according to the National Statistics Bureau (NSB).

　　An important reason for the drop is that the vast rural market has not been fully exploited. The purchase power of rural residents witnessed a lower increase compared with that of the urban residents in the past years.

　　In the face of the dual competitive pressure posed to China by the hi-tech advantage of the developed countries and the price advantage resulted from the currency devaluation in surrounding countries, China has clearly indicated: from the long-term point of view, while actively exploring international markets, it is essential to actively develop the domestic market, particularly the rural market. This is a strategic choice in conformity with China's national conditions.

　　The rural market is the most dynamic, practical pivotal point in expanding domestic demands and boosting economic growth. 900 million farmers constitute the world's largestsgroupsof consumers. Inadequate effective demand has become the greatest hindrance to China's current economic development. In the series of macro-control measures to be adopted in the second half of this year, exploring the rural market is regarded as "a rope for capturing the tiger". Experts' estimation indicates: every 100 billion yuan worth of final consumption realized in rural areas will generate 235.6 billion yuan worth of consumption demand for the entire national economy.

　　China needs virtually an institutional shakeup by which farmers are to be "liberated" and for the third time become free from a life being arbitrarily and unjustifiably isolated and cut off in the rural areas from towns.

　　That is the view Hu Angang, professor and expert known for his studies conducted on domestic issues in Qinghua University has lately voiced with regard to the problem of rural China.

　　In an interview with newsmen, he said that by China's institutional shakeup should be meant primarily helping farmers get free, helping them with investment, resettlement, and with a smaller and prosperous farmers' population to be developed as their Chinese urban counterparts.

　　Hu said the crux for China's development lies in a solution to the problem of the country's farmers. Farmers in rural China take about two thirds of the Chinese population and with this are large gaps found between town and country.

　　The key to success in exploring rural markets lies in increasing farmers' income. It is necessary to open up the rural consumer goods market to allow farmers to buy things; and it is also necessary to first open up the rural agricultural produce market, so that farmers' purses will be bulging

　　Farmers' income is steppingsintosthe period of a new round of growth at reduced rate.

　　Slow increase in farmers' income is the greatest factor thwarting efforts to explore rural markets. When farmers' purses are not so bulging, increase in actual consumption demand will be slow. To increase farmers' income is, in essence, to enhance the rural economy's adaptability to the socialist market economy. In the opinions of authoritative persons, it is essential to get hold of two links: one is "what to grow". Farmers have to grow farm crops easy to yield added value.

　　To do so, it is necessary to readjust and optimize the agricultural structure, develop high-efficiency and high-value-added characteristic agriculture. Second is "how to sell the produce". To increase farmers' income, it is essential to solve the problem concerning ties between the farmer and the market, farmers should be enabled to smoothly enter the big, ever-changing market. This requires development of industrial management of agriculture, and cultivation of a wholesale market system, intermediary service system and information service system.

　　To better infrastructure

　　As for consumption, there is, Lin Yifu, a famous Chinese economist, the dean of China Center for Economic Research, Peking University thinks, a great potential in countryside, which has been largely left untapped due to the bad infrastructure there, for example, unsteady and expensive electricity supply, sub-standard running water network, and bumpy and primitive roads.

　　Most of China's exports come from coastal areas, which enjoy better roads and proximity to ports. These areas are already switching to vegetable and fruit production to meet rising demand from prosperous coastal cities such as Shanghai. Lagging behind are the poorer "breadbasket" provinces of central and northeastern China,swheresmost of the country's wheat and corn is grown.

　　By 2001, the number of color TVs, refrigerators and washing machines for one hundred farmer households stands respectively at 54.4,13.6 and 29.9, which is correspondingly 45.1, 16.6 and 32.4 percent of the number for every one hundred urban families.

　　But in 2001, farmers' per capita income has hit 2,366 yuan (US), 16.8 percent higher than the figure for urbanites in 1991.

　　It is in 1991 that urbanites began a hot wave of shopping spree to refurbish their home with color TVs, refrigerators and washing machines.

　　Lin believes that the similar thing will also happen in today's countryside if only the basic conditions for farmers' consumption could be bettered.

　　Quoting a joint research by the CCER and NSB, Lin said that if the electricity price can be reduced by 0.10 yuan (or 1.2 US cents), it would increase a farmer household's buying power for color TV, refrigerator and washing machine by respectively 370, 667 and 909 yuan (or US.74, 80.65 and 109.92).

　　With the improved infrastructure, farmers will launch their "kitchen and bathroom revolutions", which will trigger a chain reaction of bettering their living condition, and in return decrease, by a great margin, the glut in the manufacturing sector.

　　In Lin's vision, there actually comes a virtuous cycle: Farmers' buying sentiment starts local labor-intensive businesses, which will increase farmers' income.

　　With more money in their pockets, farmers tend to buy more, then the deflation in the whole economy will be barred at a distance if not completely driven away.

　　But an expansionary monetary policy will not lighten too much the symptom of an oversupply, which appears to have infected nearly all economic sectors, said Lin, director of the Chinese Center for Economic Research (CCER) of Peking University.

　　In face of WTO

　　Experts say China, with its almost endless supply of cheap labor, could dominate in products that require intensive manual labor to grow or prepare: green vegetables, nuts, fruit or dressed meats like shrimp or chicken.

　　.The exports could help offset an expected influx of wheat, corn and soybeans from countries with large, mechanized farms, such as the United States.

　　"China has great potential," said Li Xiaoming, deputy director of Anhui Agricultural University, in the central city of Hefei. "Anything that is labor-intensive, you can do cheaper here; not just computers and clothes, but broccoli and oranges, too." China's sales abroad were rising even before joining the World Trade Organization in December. Last year, its agricultural exports jumped 25 percent to .7 billion. The United States, by contrast, exported billion worth of farm products in 2001.

　　But experts say China has many problems to overcome before it can become a global player.

　　One is primitive roads and infrastructure, especially in its vast interior. Another is inferior quality: Many fruit and nut growers will have to rip out entire orchards and start from scratch because of poorly shaped and tasteless produce. Then there is the growing concern overseas about pesticide overuse.

　　The United States and Europe have spent billions of dollars doing basic research in genetically modified crops and animals to make foods that are better-tasting, more nutritious and kinder to the environment.

　　It was here in 1978 that 18 farmers secretly split their commune's landsintosindividual plots in Fengyang, Anhui Province, But China soon began moving toward a market economy, and the town ended up being celebrated as a model of reform. Now Fengyang's wheat and corn fields are rapidly giving way to chili peppers, sesame seeds and sweet potatoes. Some farmers have dug ponds to raise fish.

　　Fengyang's vermicelli noodles have exported to Hong Kong and the United States. . "You can't sit around and wait for death," some peasants said. "You have to adapt and find new ways."

　　Hyperlink

　　Action Plan for the Program of Rural Market Information Service during the Period of the Tenth "Five-year" Plan (edited)

　　-The Ministry of Agriculture September 18, 2001

　　1. Objectives and Tasks

　　In face of the new phase of agricultural development and the new situation formed by China's entry to WTO, there are still a lot of problems and shortcomings in the work of information service for the rural market. Insgroupsto resolve the problems, the Ministry of Agriculture has started the Action Plan for the Program of Information Service, with a view of unifying objectives, thinking of steps and technical standards in the work of providing market information service for farmers, and of raising fund for the service work so as to facilitate the news media, TV, Broadcasting, information network, farmer information collectors and the agricultural socialized service system to support each other, with the aim of improving the level of information delivery service for farmers.

　　The Action Plan for the Program of Information Service concentrates on providing timely and accurate information for the development of rural economy, the strategic restructuring of agricultural structure and the increase of farmers' income. It is planned that 3 to 5 years will be needed to basically establish a rural market information service network which covers all provinces, cities and counties and most of the township and village enterprises and the leading agricultural enterprises, the agricultural products wholesale markets, agent organization and large scale farms; to further bringsintosfull play the role of the news media, agricultural socialization service organizations and agricultural broadcasting schools so as to strengthen the transmission of rural market information; to establish a solid team of farmer information collectors and to perfect the information transmission system at the village and township levels.

　　The vertically and horizontally netted rural market information service network will only be achieved when news media, agricultural information websites, teams of farmer information collectors and agricultural socialization service organizations getsintosa close collaboration. Through improving appearance and strengthening leading enterprises and natural resources, and stressing the transmission of information and the teams of information collectors, a rural market information service system which gathers information collection, processing, publication and service in one unit should be established, so that the backwardness of the rural market information service could be resolved fundamentally.

　　II. To Make the Best Use of TV, Broadcasting and Newspaper to Set Up Advantages-supplementary Rural Market Information Publication Windows

　　1. To increase the time for broadcasting the rural market information on CCTV Channel 7, CCTV-7.

　　2. To set up special pages and columns on information on newspapers.

　　3. To develop and make use of the information transmission system provided by agricultural broadcasting schools at various levels.

　　4. The administrative authorities of rural market information at various levels should strive for the support from the local communist party commission, and make full use of the local broadcasting,

　　III. To Practically Boost the Construction of China Agricultural Information Network

　　1. To make China Agricultural Information Network (CAINet) stronger and stronger. 2. To establish satellite communication system, this is used for agricultural directive and modulatory activities and services.

　　3. To develop the uniform application software around the whole country.

　　IV. To Develop and Restructure the Rural Market Information Resources

　　1. To restructure rural market information resources.

　　2. To establish a rural market information analysis and forecasting system.

　　3. To construct large scale rural market information database.

　　V. Actively promote the construction of information platforms at county, prefecture (city) and provincial levels and of information service stations at township level

　　VI. Construction and training of rural information staff Emphasis shall be made on the extension of organizational (team) networks while the rural market information network is extended to county and township level. Agricultural Technology Extension Stations,

　　Attention shall be paid to the training, assessment and certification of information service staff and rural information workers. Training of information staff at all levels shall be carried out by means of the long-distance education and training of the Agriculture Broadcasting School, the on-line training of China Agriculture Information Network and trainings at provincial, prefecture (city) and county levels respectively. A job certificate, printed uniformly by MOA, will by issued to each qualified candidate after the assessment.

　　VII. Reinforce leadership and ensuring measures

　　1. Reinforce leadership

　　2. Reinforce technical guidance

　　3. Raising funds from different channels

　　4. Reinforce project management

　　5. Reinforce examination and acceptance

　　The Department of Market and Economic Information of MOA will examine progress of local projects by stages.