VZCZCXRO2378
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0450/01 0190721
ZNR UUUUU ZZH
R 190721Z JAN 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 3988
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHRC/USDA FAS WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 000450 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDA/OSEC for DORR/BUCHANAN/TERPSTRA 
USDA/FAS for OA/YOST; OSTA/BRANT/HAMILTON; 
OCRA/ALEXANDER/RADLER/HIGGISTON/MIRELES, 
OFSO/LEE/SCHAYES/THURSLAND 
USDA FOR FAS/ITP - SHEIKH 
TREASURY FOR OASIA/ISA CUSHMAN 
LABOR FOR ILAB 
USDOC FOR ITA/MAC/OCEA - MCQUEEN 
 
E.O. 12958:  N/A 
TAGS: ECON EAGR EFIN PGOV SOCI CH
SUBJECT: Rural Work Conference Promotes Modernization As 
Top Priority; Seeks to Address Imbalances 
 
REF: 06 BEIJING 24338 and previous 
 
SUMMARY 
------- 
 
¶1. (SBU) The annual Rural Work Conference, held in Beijing 
December 22-23 2006, emphasized that modernization, 
including agricultural technology, rural finance reform, 
and energy efficiency, will be one of the Central 
Government's top priorities in the coming year.  The 
conference also aimed to address economic imbalances by 
expanding basic social welfare to provide subsistence 
allowances in poor regions, which a researcher at the China 
Academy of Social Sciences said will be particularly 
important in Western and Central China.  END SUMMARY. 
 
MODERNIZATION KEY TO NEW COUNTRYSIDE 
------------------------------------ 
 
¶2. (U) Reiterating that the Central Government's New 
Socialist Countryside policy will be a long-term endeavor, 
participants at the Rural Work Conference, chaired by Vice 
Premier Hui Liangyu, committed to increasing financial 
support for rural areas in 2007.  According to media 
reports, the conference focused on the importance of rural 
sector modernization, including promoting agricultural 
technology, reforming rural finance, and encouraging energy 
efficiency.  A December 24 editorial in the government- 
controlled Chinese-language People's Daily (Renmin Ribao) 
characterized modernization as the most important task in 
building the New Socialist Countryside. 
 
¶3. (SBU) Observers noted that the Rural Work Conference's 
modernization goal sets the tone for the Central 
Government's rural policy in 2007.  Xu Xiaoqing, Deputy 
Director of the Department for Rural Development at the 
Development Research Center of the State Council (DRC), 
said that he expects rural policy, with an emphasis on 
rural sector modernization, to be the focus of the Number 
One Document for the fourth consecutive year when it is 
published later this year. 
 
¶4. (SBU) Du Xiaoshan, Deputy Director of the Rural 
Development Institute at the China Academy of Social 
Sciences (CASS) agreed, adding that reforming rural 
financial institutions is especially important at this 
stage of China's rural development.  With more rural 
residents seeking capital to improve agricultural 
technology or pursue non-farm income through small business 
pursuits, modernization must include rural finance, he said. 
Min Tang, Chief Economist at the Asian Development Bank, 
noted that rural finance will be a key component of the 
upcoming National Financial Work Conference. 
 
RURAL SOCIAL WELFARE AND THE HARMONIOUS SOCIETY 
--------------------------------------------- -- 
 
¶5. (U) The Rural Work Conference also announced that a 
basic social welfare program would be expanded to cover all 
rural residents with an income of RMB 700 (approximately 
USD 90) or lower, a population estimated to be 23.7 million 
people.  Known as the Basic Guarantee (dibao), the program 
has existed in urban areas for many years and already has 
been instituted by several provincial governments (most 
notably Shandong Province in Coastal China) in the 
countryside.  The Rural Work Conference committed to 
launching the program nationally with the aim of narrowing 
the urban-rural income gap as well as regional gaps. 
 
¶6. (SBU) Du told Econoff that the program is a good example 
of the cities supporting the development of the countryside, 
and as a Central Government priority, the Basic Guarantee 
will be critical to development in Western and, to a lesser 
extent, Central China.  He noted, however, that the rural 
Basic Guarantee is modeled after its urban equivalent, and 
he expressed some concern that the income thresholds and 
dibao subsidies vary widely by region and locality.  He 
said, for example, that due to the higher cost of living in 
 
BEIJING 00000450  002 OF 002 
 
 
cities, urban social welfare covers residents whose income 
is many times greater than the lowest rural incomes.  Du 
said he hopes urban-rural inequalities in the Basic 
Guarantee system will be addressed. 
 
¶7. (U) In addition to the Basic Guarantee, the Rural Work 
Conference also reaffirmed the Central Government's support 
for increasing funding for education and health care in 
rural areas in 2007, both of which are priorities under the 
New Socialist Countryside (see reftels). 
 
RANDT