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Rural Economic Situation in the First Half of 2002 and Outlook for the Whole Year

Dec 13,2002

Xiao Junyan Research Report No 126, 2002

Steady performance has been the main feature of the rural economy and the market of farm products in the first half of the year. The rural economy continued to undergo structural adjustment, grain-growing area became more stable, cotton-growing area dropped drastically, and the cultivated area of other cash crops increased. While the prices of farm products continued to be sagging, the development of rural enterprises was steady. Rural financial services for agriculture improved somewhat; peasant income slightly increased; and the trend of the import and export of farm products was excellent. Overall, the environment for the performance of the rural economy was not so liberal. But it was noteworthy that in the first half of the year, the state introduced a series of reform and policy measures, which would help improve the environment for the development of the rural economy and especially for the alleviation of the peasants’ burdens.

I. The Basic Trend of the Rural Economy in the First Half of the Year

(1) Farm production

The cultivated acreage of early rice in 2002 was 5.9 percent less than that of last year, covering nine main early-rice producing regions. The cultivated acreage of spring wheat was 8.7 percent less than that of last year. The main reasons for the reduced acreage of early rice and spring wheat cultivation was that after the spring wheat in the north and the long-grained non-glutinous early rice in the south quit from the state’s protective prices, their comparative efficiency declined. As a result, the peasants continued to reduce their cultivation acreage. Besides, the prolonged cold rains in the middle and down streams of the Yangtze River in April and May made it impossible for some places to grow early rice in time.

The total output of summer grains in 2002 was 98.77 million tons, which was 2.9 percent or 2.96 million tons less than that of last year. The areas where summer grain output reduced considerably are mainly the Yellow River-Huaihe River region, the Yangtze River-Huaihe River region and the Yangtze River-Hanjiang River region. There are two main causes of the reduction in summer grain production. One is that after late April, the continuous rains in the above regions were extremely unfavorable for wheat to be in the milk and ripen. The summer grain output nationwide in 2002 was 60 kilograms per hectare less than that of last year, and reduced single crop output affected the total grain output by 1.66 million tons. The other is that the cultivated acreage of summer grains nationwide was 1.3 percent less than that of last year, resulting in an output decrease of 1.3 million tons.

(2) Peasant income

The per capita cash income of the peasants in the first half of the year was 1,123 yuan, or 60 yuan more than that in the same period of last year. If price factors are taken into account, the actual growth was 5.9 percent, or 1.7 percentage points higher than a year earlier. The main features are:

1. The peasants’ cash income from the selling of farm products continued to grow. In the first half of the year, the per capita cash income of the peasants from the selling of farm products was 469 yuan, which was 6.8 percent or 30 yuan higher than that in the same period of last year. The growth was 1 percentage point higher.

2. The peasants’ cash income from the non-farm industries posted a steady growth. In the first half of the year, the per capita cash income of the peasants from the non-farm industries was 566 yuan, which was 5.2 percent or 28 yuan higher than that in the same period of last year. This steady growth was attributed to the fact that more peasants left their native places for non-farm occupations. Their increased income accounted for one-fourth of the cash income growth in the first half of the year.

3. The peasants’ tax and fee burdens continued to fall. In 2002, China’s experiment on reforming rural tax and fee collection expanded to 16 provinces and autonomous regions in the central and western regions. This helped increase the peasants’ income. In the first half of the year, the per capita spending on taxes and fees nationwide was 18 yuan, which was 0.7 yuan or 3.9 percent less than that of the same period of last year.

(3) Township enterprises

The main features of the economic performance of the township enterprises in the first half of the year were as follows:

1. Their total economic amount was on a steady rise and their economic performance was excellent. In the first half of the year, the township enterprises nationwide realized a total added value of 1,505.5 billion yuan, or 8.8 percent higher than that of the same period of last year, of which, the industrial added value was 1,047.6 billion yuan, or 8.9 percent higher than that of a year before; the operating revenue totaled 8,281.6 billion yuan, or 8.7 percent higher than that of a year before; the value of export delivery totaled 478.8 billion yuan, a growth of 11.3 percent over a year before; the profit was 344.6 billion yuan, or a growth of 8.3 percent over a year before; the tax paymen totaled 135.8 billion yuan, a growth of 9.9 percent over a year before. All these indicators maintained a coordinated and steady growth.

2. Their industrial production grew steadily and their production and marketing were well dovetailed. In the first half of the year, the township enterprises accomplished a total industrial output value of 4,818.0 billion yuan, which was a 9.2 percent increase over the previous corresponding period. Their output value of sales totaled 4,580.6 billion yuan, up by 9.2 percent over the same period of last year, and their rate of turnover of industrial products was 95.07 percent, which was 0.4 percentage points higher than that in the corresponding previous period. Their accumulated industrial sales revenue totaled 4,231.3 billion yuan and the industrial profit totaled 229.7 billion yuan. Sales profit rate was 5.43 percent, which was 0.1 percentage points higher over a year before. This is an indication that the economic efficiency of the rural industries improved slightly.

3. The enterprises of considerable scales posted an excellent development momentum, and played a visible leading role. In the first half of the year, their annual sales revenue totaled 5 million yuan; the industrial enterprises realized an accumulated added value of 380 billion yuan, or a growth of 12.8 percent over the same period of last year. Sales revenue totaled 1,405.9 billion yuan, up by 12.7 percent. The value of export delivery totaled 335 billion yuan, up by 13.2 percent. Profit totaled 69.4 billion yuan, up by 9.7 percent. Tax payment totaled 44.3 billion yuan, rising up by 10.1 percent. The total industrial output value was 1,570.8 billion yuan and the total sales value was 1,499.0 billion yuan. As a result, the rate of turnover of products was 95.44 percent, or 0.37 percentage points higher than the average level of all township enterprises. The added value realized by the industrial enterprises of considerable scales rose from 35.3 percent to 36.2 percent against that of all rural enterprises, which was 0.9 percentage points higher than that of a year before. The proportion of the value of the export delivery by the industrial enterprises of considerable scales in the total export delivery by all township enterprises increased from 60.1 percent in 2001 to 69.9 percent. The growth was 9.8 percentage points.

4. Export delivery grew rapidly. In the first five months of the year, the export range of the township enterprises wandered around 10 percent. In June, however, the growth rate was higher. Exports in the first six months showed 11.3 percent increase over a year earlier and 3 percentage points higher than the monthly average level of growth in the second half of last year.

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