Step up construction of rural infrastructure by actively adjusting investment mix, consolidate material basis for establishing socialist new villages - National Development and Reform Commission (NDRC) People's Republic of China

Step up construction of rural infrastructure by actively adjusting investment mix, consolidate material basis for establishing socialist new villages
Reference material for the Fourth Session of the Tenth National People's Congress
2006-03-09
NDRC NEWS
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In light of requirement and arrangement of CPC Central Committee and State Council of China, the National Development and Reform Commission (NDRC) has been actively adjusting fixed assets investment mix over the 10th Five-Year plan period (2001-2005). While renewing efforts in treatment of major rivers and supporting unprecedented ecological development, NDRC has, as always, considered strengthening construction of rural infrastructure a priority in arranging investment of central budget and state treasury bonds. As a result, "One Adjustment and Three Favors" has been achieved. "One adjustment" means to adjust investment mix continuously for increasing investment in agriculture and rural areas. From 2001 to 2005, over 300 billion Yuan has been allocated by the NDRC in agriculture and rural development from central budget and state treasury bonds, taking up nearly 40% of the total investment made at the same period. Although central government reduces total investment year after year, the proportion of investment in agriculture and rural areas has seen a growth rather than a decrease. The first "favor" refers to favoring projects that can improve integrated agricultural productivity¬which has been crucial for restructuring agricultural sector, promoting recovery growth of grain production and safeguarding food security. The second "favor" refers to favoring projects to directly improve production and living standards in rural areas, which have been reflected in increased investment in "six kinds of small scale projects" concerning rural infrastructure development, i.e. water saving and irrigation projects, drinking water projects, countryside road projects, hydro power projects and grassland corral projects. During the "10th Five-Year Plan" period, investments in the above-mentioned projects have been rising year by year, with the total investment exceeding 100 billion Yuan, alleviating poor road condition in rural areas, increasing electricity and drinking water accessibility, and improving farmers' production conditions and living standards. The third "favor" is to give preference to projects promoting rural social undertakings. With increased support for education, health, cultural infrastructure, facilities in countryside schools for compulsory education have been improved substantially. Public health capacities, basic medical services and public services rendered in rural areas have been enhanced steadily. In addition, to implement western China development strategy, western areas has been a favored region in geological distribution of investment. .

Following spirit of the Number One Decree of CPC Central Committee in 2005, the NDRC has highlighted works in the following four aspects:

I. Make substantial efforts in improving integrated agricultural production capacity

In 2005, the NDRC renewed its efforts in arranging a large number of integrated agricultural capability-building projects and programs. Firstly, 1 billion Yuan has been arranged for quality grain industrialization project in 484 counties (farms), which are located in major grain producing areas; 400 million central budgetary fund has been invested in projects for building large commercial grain producing bases, which can steadily improve grain output. Secondly, 2.15 billion Yuan has been allocated from treasury bonds to improve irrigation facilities and to build supporting facilities in large irrigated areas or upgrading water-saving facilities. 4 provinces, including Hubei, Hunan, Jiangxi and Anhui, have started flood-draining facility reconstruction. Thirdly, quality seeds and vegetation protection projects have been supported for improving unit yields, quality and efficiency of grain production. Fourthly, efforts have been made to support the quality cotton production basis in Xinjiang Uigur Autonomous Region and high quality oil-bearing plant producing areas along Yangtze River. Major pilot projects, such as modern agriculture projects or projects for integrated economic development of small towns have continued. Fifth, implementation of animal epidemic prevention plan has been accelerated. Funds from treasury bonds totaled 1.96 billion Yuan have been used for animal epidemic prevention system. In the meantime, to promote sustained and healthy development
of husbandry and aquaculture, quality breed projects as well as projects for improving port management and port infrastructure have been strengthened.

II. Concentrate on providing farmers with their most needed living facilities

The NDRC has increased investment in agricultural infrastructure. Firstly, 2 billion Yuan of treasury bonds has been earmarked to start up countryside safe drinking water project. Some initial survey shows that the Chinese government has allocated 12.3 billion Yuan from countryside drinking water project from 2000 to 2005, and 22 billion Yuan has been invested if contribution from local government and local people were counted. The project has set a historic record by solving drinking water difficulty for 60 million countryside population and giving access to safe drinking water to 11 million people. Secondly, 1 billion Yuan of treasury bonds has been earmarked for countryside marsh gas facilities. 3 million countryside families have benefited from 3 billion Yuan of treasury bonds of 2003 to 2005, and some initial economic, social and ecological benefit has been witnessed. At present, 17 million countryside families are using marsh gas. Thirdly, 15 billion Yuan's of central government investment was mobilized to accelerate countryside road construction. During the 5 years of the "10th Five-Year Plan" period, the central government has invested 400 billion Yuan to countryside road across the whole country, including 100 billion Yuan of treasury bonds and automotive purchase tax,
bank loans and local investment. Large scale of countryside road construction has rolled out. Fourthly, build power supply facility in regions without access to power. No-power-access rural population has reduced from 30 million at the beginning of the "10th Five-Year Plan" to current 20 million. Besides, the Chinese government continues to provide jobs as a form of relief and implement ecological migrant pilot projects. The NDRC's statistics show that 28.8 billion Yuan was used as central government subsidy to support countryside "six kinds of small scale projects".

III. Accelerate social undertakings in countryside.

The NDRC continues to increase investment in social undertakings in countryside such as education, health and culture in 2005 in order to bring about a radical change in the backward situation. Firstly, improve education conditions in countryside. 1.5 billion Yuan treasury bonds were invested in countryside boarding schools in western part of China, 500 million Yuan in primary and middle schools in middle and western parts of China for remote education facility, satellite education receiving facility, education CDs and CD players. Secondly, 2.7 billion Yuan treasury bonds were spent in countryside health care service, and a town-county-village countryside health service network which is affordable by farmer, and material conditions for countryside cooperative health system have been laid out thereby. Thirdly, 200 million Yuan treasury bonds were spent in western China countryside planned-health service facility. Fourth, 300 million Yuan was used in Every Village TV Coverage project and other countryside cultural facility, like movie showing in rural area.

IV. Promote pro-rural investment integration

In recent years, there has been a prominent disparity between the investment demand and capital supply
of infrastructure construction in rural areas. Since 2004, while making efforts in increasing the total volume of investment, following the arrangements of the CPC central committee and the State Council, the NDRC, together with the Ministry of Finance, Ministry of Science and Technology, Ministry of Agriculture, Ministry of Water Resources, State Forestry Administration, State Council Poverty Alleviation Office and other government agencies, vigorously explores ways to integrate government investment in supporting the rural area or pro-rural investment. Based on studies and research, a preliminary proposal on the integration
of government pro-rural investment was put forward and approved by the State Council. File [2005] No. 1
of the CPC central committee requires to "encourage, with county as a unit, the integration of investment through general plan, guidance, overall arrangement, clearly defined responsibilities and project-oriented measures and improve the efficiency of capital utilization". With those requirements, in 2005, a number
of provinces and regions choose some experimental counties for pro-rural investment integration and explored its feasibility, which took plan and projects as the platform, the construction of the new countryside as an opportunity and the establishment of a coordination mechanism for pro-rural investment as the instrument. With these explorations, an investment integration approach has initially taken shape, which can been
summed up as "making general plan beforehand, strengthening links, coordinating overall arrangements, fulfilling each party's duties, forming collective forces and pursuing practical effect, focusing on priorities and starting from easy tasks first". Some achievements have been made. Drawing the experience of different experimental counties, the NDRC drafted a guiding proposal on promoting the integration of government pro-rural investment at county level and designated several experimental counties. After accepting the comments of relevant government agencies, the NDRC will make timely publication of the guiding proposal and push the integration of pro-rural investment at the county level move steadily forward.

2006 is the first year of the "11th Five-Year" period and the beginning of constructing a socialist new countryside. With the objectives set in File [2006] No.1, the NDRC will firmly turn the input in infrastructure construction towards the rural area so as to lay a solid material foundation for socialist new countryside. The first is to strive to increase input. Investment from the central budget and investment in form of treasury bonds will continue to reduce, compared with last year. Against this background, the NDRC will actively adjust the investment structure, increase input into agriculture and the rural area and resolve to realize the two "guarantees", which refers to guaranteeing a higher ratio of annual investment in rural area construction than that in 2005 and guaranteeing the continuous increase of investment in directly improving the production and living conditions in rural area compared with 2005. The second is to define priorities. The comprehensive production capacity building for agriculture should continue to be enhanced to steadily increase grain production and to continuously increase farmers' income. Central investment in rural drinking water safety and rural marsh gas will increase by a large margin. The project of renovating rural roads during the "11th Five-Year" period will be launched. Construction of power facilities in the regions with no electricity will be accelerated and the rural power grid in some provinces will be further improved. In rural area, education, medical service and sanitation, culture, birth control and other social undertakings will continue to expedite development. The third is to improve systems and mechanisms. General plan should be further strengthened so that it can play the role of making overall consideration and coordination in the rural infrastructure construction. More efforts should be made to coordinate and integrate pro-rural investment, putting an emphasis on tackling the prominent issues such as scattered pro-rural investment, lack of linkage and low efficiency. Systems should undergo constant innovation, for example, to accelerate reform on the system of rural infrastructure ownership and to study the establishment of a long term mechanism in managing rural infrastructure. Reform on the rural investment and financing system will continue to deepen to gradually form a multiplied financing channel for rural infrastructure and to attract more capital from banks, enterprises and the private sector to invest in the construction of a socialist new countryside.