The central budget will also earmark 13.7 billion yuan as a poverty-alleviation fund, 700 million yuan more than last year. Infrastructure construction in poor villages will be given key support. Funds will also be made available for agricultural industrialization and for training poor laborers to be transferred to non-agricultural sectors.

Rural governments: Rural governance used to depend on the agricultural tax. Since this tax was abolished from this year, the government will apportion more than 100 billion yuan annually for town and township governments and to meet the needs of rural compulsory education. This figure comprises 78 billion yuan in transfer payments from the central budget and more than 25 billion yuan from local budgets.

Road construction: In the next five years, the government will set aside 100 billion yuan for constructing rural roads.

Graduate village chiefs

According to the Beijing Municipal Government, several measures have been passed to encourage college graduates to work as village officials. This year, Beijing will recruit 2,000 college graduates to assist heads of suburban villages in building a new countryside.

Rural China has more than 480 million laborers, of whom illiterates or primary school graduates account for 37.3 percent, junior middle school graduates account for 50.2 percent, senior middle school graduates, 9.7 percent, technical secondary school graduates, 2.1 percent, and junior college or college graduates, only 0.6 percent. This means those with junior middle school degree and below total 420 million or 87.5 percent of rural laborers.

"While rural areas are in transition to modem agriculture, it will be very difficult to finish industrial restructuring based on a group with such low education," said Zhang Baowen, Vice Minister of Agriculture. "College graduates serving in rural areas can help farmers accept new concepts and grasp new technologies."

Many local governments are now encouraging college graduates to serve in rural areas. In central China's Henan Province, 3,000 college graduates are acting as village officials. It is believed that 80 percent of them have helped promote local development.

Zhang Baowen said the Ministry of Agriculture will increase funds for farmers' education or training. This will include:

Equipping farmers with scientific knowledge and skills: In 2003, 22.96 million farmers received such training. The target is to reach 16 million more by 2010 to ensure there is one trained person for every eight rural households.

Training rural laborers in skills required by the non-farm sector: Since 2005, the Ministry of Agriculture and five other ministries have helped 2.2 million rural laborers make the transfer to the non-farm sector.

Implementing the "plan of training 1 million technical secondary school graduates": Over the next 10 years, the Ministry of Agriculture will implement the "plan of training 1 million technical secondary school graduates," to deal with planting, breeding and processing, as well as rural management and farm technology.

Minister of Agriculture Du Qinglin has pointed out that attention must also be paid to contradictions existing in agriculture and rural economic development.

Raising agricultural productivity is no mean task. It is difficult to sustain growth in farm income. The international competitiveness of agriculture remains weak and exports of agricultural produce trigger trade conflicts and technical barriers. Agricultural innovation continues to lag behind.

Chen Xiwen said providing social security coverage for farmers is a major hurdle in building a new countryside. Statistics show that in 1,000 counties in 10 provinces, rural minimum living standards have been adopted, benefiting 4.8 million villagers or 2.53 million households. "However, the problem of rural minimum living standards hasn't been solved in general," said Chen.

Rural financing is another bottleneck. In recent years, state-owned commercial banks have been retreating from remote rural areas. There are no financial institutions, except rural credit cooperatives, whose strength is limited.

"An overriding dependence on central and local budgets in the absence of rural financial institutions would mean that rural areas will develop very slowly," he said.