Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: BubbaFred who wrote (2608)	2/8/2004 8:18:54 PM
From: BubbaFred	Read Replies (1) \| Respond to of 6370

Tax cuts, aid lift for farmers Pamela Pun In an effort to prop up China's badly flagging agriculture sector, the State Council has launched a comprehensive range of tax cuts and direct subsidies to encourage farmers to grow more grain and increase their stagnant incomes. The moves come just as Premier Wen Jiabao nears his one-year anniversary in office and at a time of increasing rural poverty and a widening income gap between farm and city. With grain prices rising and output falling, the World Bank has forecast China could become a net importer of cereal grains as early as next year. National Bureau of Statistics figures indicate that annual grain production has fallen from a high of 512 million tonnes in 1998 to 457 million in 2002. The bank forecasts that, if no measures are taken, net grain imports will reach 14 million tonnes in 2005, rising to 19 million in 2010 and 32 million in 2020 as population increases, incomes rise and more people leave the land. Agricultural production is beset not only by falling farm incomes, but diminishing water supplies, failed policies and corruption. Urban encroachment shrank farmland devoted to wheat by 7.5 per cent in fiscal year 2002-2003. It is expected to fall another 4.5 per cent this year, according to government statistics. In an effort to combat the problems, the current 8.4 per cent agricultural tax is to be cut by 1 percentage point and a general tax on all agricultural specialities, except for tobacco leaf, will be waived, according to a circular made public yesterday by state media. Every percentage point cut in the agricultural tax means a seven-billion-yuan (HK$6.57 billion) loss to government coffers. The waiver of the agricultural specialities tax will cost the government another 4.8 billion. The latest official figures show agricultural tax last year was 33.82 billion yuan - up 4.52 per cent over the previous year. According to the circular, new agriculture investment by the Central and local governments this year will focus on the country's breadbasket region. Output in the grain production base, including the North China Plain and the Northeast China Plain, accounts for 70 per cent of China's total grain output. Farmers there will get direct financial subsidies when introducing improved varieties of grain, purchasing large agriculture machinery and developing high-yield farmland. The government will also set aside part of the money from leases of state-owned land to stimulate grain production and increase farmers' income. The circular gave no figures on the total of the direct subsidies. Grain production is a particularly crucial sector with both production and livelihood suffering. Agricultural incomes are less than a fifth that of urban incomes and grain farmers earn even less, according to the 9,000-character circular. As a result, the slow growth of farm incomes has restricted domestic market growth in rural areas. To ensure stable grain supply, the government must rekindle farmers' enthusiasm by raising incomes and reducing government strictures, according to Chen Xiwen, an official with the central financial and economic work leading group. At a recent meeting in Beijing on the national economic situation, Premier Wen said the Central Government planned to cut agricultural tax by six percentage points to 2.4 per cent in the coming six years, the pro-Beijing Wen Wei Po newspaper said yesterday. The circular also pointed out, for the first time, that farmers-turned-workers have become an important component of the industrial workforce, especially because they boost rural incomes by remitting money back to depressed areas. According to Xinhua, there are now 130 million such workers toiling in urban and rural enterprises, a figure that has been steadily rising for two decades. Frequently, newly-arrived rural workers face hurdles and discrimination in adapting to urban communities, and the circular urged local governments to improve their working and living environment. 9 February 2004 / 02:11 AM thestandard.com.hk