CHINA S 10.3 percent economic growth last year drove the biggest increase in the nation s rural incomes in a quarter century, bolstering efforts to spur consumption in the world s most populous nation.
In the countryside, per capita net income rose 10.9 percent to 5,919 yuan (US$898), a statistics bureau report showed over the weekend. The gain was faster than for urban incomes for the first time since 1997. The report also showed an acceleration in retail sales and industrial production at the end of last year.
A stimulus-induced investment boom has fueled growth in inland provinces, lifting wages both there and in trade-reliant coastal regions now fighting to retain workers. Guangdong, the biggest exporter among China s provinces, said last week it would raise minimum wages.
Faster rural income growth is a result of China s economic rebound and booming construction across the nation, which boosted migrant workers employment and wages, said Wang Tao, a Beijing-based economist at UBS AG, who previously worked at the International Monetary Fund. There is a vast rural market to tap and the key is to boost jobs and incomes for farmers.
During the financial crisis, China rolled out subsidies for purchases of home appliance and vehicles in rural areas, aiding manufacturers including Qingdao Haier Co., GD Midea Holdings Co. and Gree Electric Appliances Inc. In 2010, 173 billion yuan of home appliances were sold under the stimulus program, according to Ministry of Commerce data.
Agricultural price increases contributed to the gain in farmers incomes last year. In the second half of 2010, the average wholesale prices of corn, wheat and cotton in China rose an annual 15 percent, 6 percent and 64 percent, respectively, according to data from Shanghai JC Intelligence Co.
Chinese officials have indicated that the nation s five-year plan, running through 2015, will have a renewed focus on boosting consumption to reduce dependence on investment and exports. Policymakers have for decades sought to narrow the gap between inland provinces and coastal export powerhouses.
The report also showed the difference that remains: the average urban disposable income rose 7.8 percent to 19,109 yuan, still more than three times the rural figure.
China s retail sales grew at a 19.1 percent annual pace in December, partly boosted by inflation, the report showed. For the full year, the increase was 18.4 percent.
The economy s strength would drive further increases in household income this year, supporting solid growth in consumer demand, JPMorgan Chase & Co. said in a note.(SD-Agencies)
