21.　  Policy to maintain stability and permanency of current land contract relationships

The Third Plenary Session of the Seventeenth Central Committee of CPC adopted the Decision on Major Issues concerning Rural Reform and Development. The Decision requires the government to maintain the stability of and improve on the basics of the current system of operation in rural areas, and to “grant farmers with full and unfettered right to contract and manage land, and to maintain permanency of existing land contract relationship.” Clearly, the policy reassures farmers with long-term predictability of their right to manage land.

According to Chinese law, rural land is owned by farmers’ collectives, and land use right is governed by the household contract system. This two-tier system that integrates collectives and households is fundamental to our rural system that befits a socialist market economy and the nature of agriculture production in China. This is a system on which the CPC’s rural policies are built, and with which compliance is necessary. The basic system of operation in the rural area should focus on maintaining and improving the mechanics of land contract relationships. Our policy focus is to give farmers full and unfettered right to contract and to manage land, and to ensure stable and permanent land contract relationships.

The state acts according to law in maintaining the long-term stability of land contract relationships in rural areas, and in protecting the contracting parties, ensuring their right to contract and manage land and freedom from violation by any organization or individual. During the contract period, except on statutory grounds, the lessor may not reclaim or alter the contracted land. Upon expiration of the contract period, the lessor may continue to contract land according the relevant state regulations.

22. Policies on the improvement of rural financial services

Financial services in rural areas must be improved to sustain agricultural, rural economic and social development. To satisfy financial services needs for agricultural and rural economic growth, this year, the Central Government has committed to introducing innovative mechanisms, products, and services in the rural financial sector.

First, offer greater incentives to encourage the flow of credit and private funds to agriculture and rural areas. This year, the government will increase support financial institutions for agriculture-related financing activities by offering favorable fiscal, tax and monetary policies. By offering tax incentives, expense subsidies and rewards for expansion, the government hopes to channel credit to Sannong (“farmers, agriculture and rural areas) initiatives. The government will improve upon the regulatory processes and evaluation methods for financial institutions that support Sannong initiatives to encourage loans for agriculture and rural development, especially medium and long-term loans for development and infrastructure construction, and eventually increase the share of agriculture-related loans in their loans portfolio.

Second, facilitate robust development of new forms of rural financial institutions, including village and township banks, loan companies, and rural funds cooperatives. By the end of 2010, more than 400 of such financial institutions were established. Since establishment, they have increased the number of service outlets very quickly, and have effectively improved financial services and lowering loan interest rates in rural areas. The improvement was well-received by the people. The central government will continue the same efforts in 2011, and will gradually increase the number of pilot institutions to provide more farmers with access to financial services.

Third, encourage innovation in rural financial products and services. This year, the central government will introduce policies to support development of micro-credit, encourage financial institutions to diversify their micro-credit products and meet farmers’ demand for different types of micro-loans. To boost modern agriculture, and the secondary and tertiary industries in rural areas, the government will support financial institutions in providing micro-loans to rural young people for business start-ups. To vitalise liquidity circulation within the rural areas, the government will also guide farmers in arranging credit cooperation to meet their borrowing needs.

23. Policies to improve agricultural insurance services

Since commencing the pilot project on agricultural insurance premium subsidy in 2007, there have been increases in purchase of agricultural insurance, in insurance offering, and in geographical coverage. Growth in use of insurance has been instrumental in mitigating risks of natural disasters to agriculture. This year, the central government will speed up development of the agricultural insurance industry and improvement of policies on agricultural insurance services.

First, premium subsidies to include more crops and more areas. So far, the pilot project is conducted in 24 provinces, and targeted at bulk crops (maize, rice, wheat, cotton), oil crops (soybean, peanut, rapeseed), major animal products (sow, dairy cattle, fattening swine), and potato, naked barley, Tibetan antelope, yak, natural rubber, forests, etc. The government will continue to improve its policy by increasing the size of subsidy, range of crops, and greater geographical coverage, so that more farmers will benefit from agricultural insurance.

Second, encourage offering of insurance services in new sectors, such as farm machinery, fishery, etc. In recent years, to develop agricultural specialisation, some areas have begun offering insurance services for specialty vegetable production, sugar crop production and fisheries. To promote agricultural modernisation, some have extended insurance services to farm machinery. To serve the Sannong goals, others have extended their insurance coverage to include farm houses and micro-insurance service, which have been well-received by farmers. Therefore, the central government supports and encourages local authorities to continue offering insurance services in the above sectors to safeguard agricultural production and farmers’ well-being.

24.　 Fiscal award and subsidy for village-led discretionary public works

To encourage villagers to initiate public works projects by pooling resources and raising funds from different channels, the government offers awards and subsidies as part of its effort to drive village-led development initiatives using a combination of government and private funding. Pilot programs were launched  in 3 provinces in 2008, 17 provinces in 2009, and 27 provinces in 2010. The three pilot years have seen some preliminary successes: awards and subsidies given out by governments of various levels amounted to 47.7 billion yuan, and private contribution was more than 180 billion yuan. Most of the awards and subsidies were funded from the central, provincial and (selective) municipal and county budget. Government awards and subsidies account for a fixed percentage of village public works funding. Based on local circumstances, local governments are also encouraged to bundle specialized agricultural funds with their awards and subsidies for village-level public works projects to leverage the impact of public funding. Government awards and subsidies are mainly given for public works projects that benefit villagers directly, such as small-scale irrigation and drainage facilities, village roads, sanitation facilities and afforestation. The government gives priority to public interest projects that are most needed by villagers and that generate faster impact, such as road laying and village environment. Government awards and subsidies may be delivered in cash or in kind.

The Central Government’s No.1 Document of 2011 specifies that “[the government] should encourage self-reliance and diligence among farmers, and increase the size of government awards and subsidies. To motivate farmers to build and repair irrigation and drainage facilities Awards and subsidies should be given based on centralised planning, and proportional to to the amount raised by the farmers and the manpower devoted to the project.” In 2011, the policy will be extended to all provinces, autonomous regions and municipalities. This year, the 16 billion RMB is earmarked in the central budget as the awards and subsidies. Part of the funds are allocated to local governments, and local governments may top up the funds using the local budget based on their financial circumstances. Government awards and subsidies for building village-level public works will be increased to more than 50% of the total cost of the project; central budget allocated funds will account for 40%. Government funding for discretionary projects will be progressively increased.

25.　 Policies to facilitate development of specialized farmers’ cooperatives

Major policies and measures that facilitate development of specialized farmers’ cooperatives include:

1) Preferential taxes. Specialized farmers’ cooperatives selling their members’ agricultural produce are deemed the same as producers selling their own products; hence, products sold in specialised farmers’ cooperatives are exempted from VAT. General VAT payers who purchase tax-free agricultural products from specialised farmers’ cooperatives are entitled to 13% deduction of input VAT. Purchases of agricultural plastic films, seeds, seedlings, fertilizers, pesticides and machinery from a cooperative by its members are exempted from VAT. Purchase and sales contracts between specialised farmers’ cooperatives and its members relating to agricultural products and agricultural production inputs are exempted from stamp duty.

2) Financial support. All specialized farmers’ cooperatives are subject to rural credit rating. Greater credit support is given, especially to large and established cooperatives that have good branding, good service, good representation of farmers and a good credit record. The government encourages cooperatives with the capacity to develop credit cooperation.

3) Fiscal support. Between 2003 and 2008, the central government had budgeted 1.8 billion yuan as special fund to help specialised farmers’ cooperatives improve service and capacity to development. Cooperatives receive priority for special fund subsidy when purchasing agricultural machinery.

4) Pro-agriculture policy. In 2010, MOA was among one of the seven ministries that, allowed specialized farmers’ cooperatives to apply for suitable agriculture-related projects. Projects that are not opened to specialised farmers’ cooperatives should do so as soon as possible, and should specify the qualifying criteria. In future,  such projects must be open to specialised farmers’ cooperatives and should specify the qualifying criteria. Currently, the MOA has appointed specialised farmers’ cooperatives to implement a number of projects, such as building of standard plantations for vegetables and horticulture crops, large animal husbandry farms (parks), healthy aquaculture model farms, as well as the new phase of the “vegetable basket” program, high-yield grain project, standardization demonstration projects and general national agricultural development projects.

5) Distribution of agricultural produce. The government encourages and guides specialised farmers’ cooperatives to establish direct links with different market players such as large supermarket chains, college canteens and producers of agricultural input.

6) Human resources. Starting from 2011, 1500 cooperative leaders will be trained under the human resource development program for modern agriculture very year. Training for cooperatives will continue under the “Sunshine Project”, and will focus on training cooperative leaders, accountants and advisors to grassroots cooperatives. Young people from rural areas and graduate village officials are encouraged to participate in or to lead in the formation of cooperatives.

26.　 Policy to the expand the scope of the Pilot for the New Rural Social Pension Scheme

The New Rural Social Pension Scheme (the “New Rural Pension”) is another innovative pro-agriculture policy in the new era. The central government has specifically required that the New Rural Pension to basically cover all rural residents of age by 2020.

The New Rural Pension “ensures basic living, broad coverage, flexibility and sustainability” by adopting “social fund pool plus personal account” as the basic model. The modelcombines individual contribution, corporate contribution and government subsidy, and pension benefit includes benefit payment of the basic pension and the personal pension account. Rural residents who are not schooling, who are 16 years old or above and who have not joined any urban pension insurance scheme are eligible for the New Rural Pension. Rural residents who have reached 60 years old and who meet eligibility requirements above may claim pension.

Annual premium payment options consist of five tiers, ranging from 100 yuan to 500 yuan. Depending on their financial circumstances, local governments may increase the number of tiers. The government pays the full basic pension to qualified insured persons. The State Council has set the minimum basic pension payable at 55 yuan/month/person; however, local governments may increase the amount based on their financial capacity. Local governments must subsidiseinsured persons at 30 to 60 yuan /year/person. Local governments must pay for part of or the entire amount of the lowest tier premium for needy groups such as severely disabled persons.

The government shall open a personal account for every insured person. All contribution records, including individual contribution, corporate contribution, premium aid received from other entities or individuals and local government subsidies must be entered into 记入the personal account. Pension benefit consists of benefits from the basic pension and the personal account, and is in the form of a whole-life payment. Rural residents of pilot areas and who have reached 60 years of age shall immediately enjoy basic pension of the lowest tier as long as their children that meet qualifying criteria are insured.

The Central Government has specifically required that local governments shall, where conditions permit, speed up the pilot process and encourage residents of pilot areas who meet the qualifying age to get insured, and shall ensure that senior residents promptly claim their full pension. Pilot programs have been launched in most parts of the four municipalities and 838 counties in other provinces and autonomous regions, covering 24% of the rural areas. By December 2010, the total number of insured persons had reached 103 million, of which, pensioners accounted for 28.63 million. Total subsidy from the central budget earmarked for basic pension totalled 11.08 billion yuan. The central government intends to extend the pilot to 40% of the counties, so that more rural persons will benefit from the scheme.

27. Policy to improve on the New Rural Cooperative Medical Scheme

To improve medical care and livelihood for farmers, the CPC Central Committee and the State Council will gradually increase the levels of fund contribution, government subsidies and protection for？the New Rural Cooperative Medical Scheme. In 2010, the total yearly contribution per person was increased from 2009’s 100 yuan to 150 yuan: the central government subsidises 60 yuan for western and central China, and an appropriate proportion for eastern China. Local government subsidy was increased to 60 yuan, and individual contribution was increased from 20 yuan to 30. By end December 2010, the total number of people in the New Rural Cooperative Medical Scheme had reached 836 million. Total government subsidy was 118.784 billion yuan, and payment issued totalled 1.087 billion person-times, 43% more than the previous year. In 2011, yearly subsidy per person will increase from 120 yuan to 200 yuan and the claim ceiling increased to 50,000 yuan, the claimable percentage being 70% for qualified items. These measures will improve level and scope of coverage, and will mitigate the problem of inaccessibility and unaffordability of medical services in rural areas.

28. Policy to upgrade rural power grids

Rural power grids will be upgraded as of this year. During “the Twelfth Five-year Plan” period, all rural power grids will be upgraded to better deliver power for domestic consumption and farming. The upgraded rural power grids will be reliable, advanced, energy-saving and well-managed.

The initiative consists of several measures:

1)Rebuild completely the rural power grid system in areas where power grids have not been rebuilt. Rebuilding will be based on new standards and requirements;

2)Upgrade rebuilt grids that are low in power supply capacity or reliability;

3)Upgrade power supply facilities to meet the power requirements for irrigation, processing of cash crops and agricultural products and by-products, animal husbandry, livestock rearing and aquaculture based on local conditions;

4)Supply power to urban and rural areas from the same power grids based on the same electricity tariffs to ensure coordinated urban-rural development, so as to reduce the burden of electricity cost on rural users;

5)Provide greater funding. The central government will fund upgrading projects for western and central China. Electrical tariffs will increase by two cents per kWh shall to repay the principal and interest for loans taken up to fund upgrading projects.

29.　 Policy to provide home appliances subsidies for rural residents

The home appliances subsidy policy (“Jiadian Xiaxiang”) will continue for four years. For Shandong, Henan and Sichuan provinces and the city of Qingdao, the subsidy policy will continue until end November 2011. For Liaoning, Heilongjiang, Anhui, Hubei, Hunan and Shaanxi provinces, the Inner Mongolia and Guangxi Zhuang autonomous regions, Chongqing Municipality and the city of Dalian, the subsidy policy will continue till end November 2012. For the remaining 22 provinces, autonomous regions, municipalities and cities and the Xinjiang Production and Construction Corps, the subsidy policy will continue until end January 2013.

Currently, subsidised products include: colour televisions, refrigerators and freezers, washing machines, mobile phones, computers, water heaters, air-conditioners, microwave ovens and induction cookers.

Subsidy details:

Colour televisions: Price ceiling is 7,000 yuan; 13% subsidy for purchase price of 3,500 yuan (inclusive) or less; 455 yuan subsidy for purchase price of between 3,500 yuan and 7,000 yuan.

Refrigerators and freezers: Price ceiling is 4,000 yuan; 13% subsidy for products that cost 2,500 yuan (inclusive) or less; 325 yuan subsidy for purchase price of between 2,500 yuan and 4,000 yuan.

Mobile phones: Price ceiling is 2,000 yuan; 13% subsidy for purchase price of 1000 (inclusive) or less; 130 yuan subsidy for purchase price of between 1,000 and 2,000 yuan.

Washing machines: Price ceiling is 3,500 yuan. 13% subsidy for purchase price of 2,000 yuan (inclusive) or less; 260 yuan subsidy for purchase price of between 2,000 and 3,500 yuan.

Air conditioners: For wall-mounted units, price ceiling is 3,500 yuan;  13% subsidy for purchase price of 2,500 yuan (inclusive) or less; 325 yuan subsidy for purchase price of between 2,500 and 3,500 yuan. For floor-standing units, price ceiling is 6,000 yuan; 13% subsidy for purchase price of 4,000 yuan or less; 520 yuan subsidy for purchase price of between 4,000 and 6,000 yuan.

Computers: Price ceiling is 5,000 yuan; 13% subsidy for purchase price of 3,500 yuan (inclusive) or less; 455 yuan subsidy for purchase price of between 3,500 and 5,000 yuan.

Water heaters: For solar units, price ceiling is 5,000 yuan; 13% subsidy for units that cost 4,000 yuan (inclusive) or less; 520 yuan subsidy for purchase price of between 4,000 and 5,000 yuan. For storage units, price ceiling is 2,500 yuan; 13% subsidy for purchase price of 1,500 yuan (inclusive) or less; 195 yuan subsidy for purchase price of between 1,500 and 2,500 yuan. For gas units, price ceiling is 3,500 yuan; 13% subsidy for purchase price of 2,500 yuan (inclusive) or less; 325 yuan subsidy for purchase price of between 2,500 and 3,000 yuan.

Induction cookers: Price ceiling is 1,000 yuan, 13% subsidy for purchase price of 600 yuan (inclusive) or less; 78 yuan subsidy for purchase price of between 600 and 1,000 yuan.

Microwave ovens: Price ceiling is 1,500 yuan; 13% subsidy for purchase price of 1,000 yuan (inclusive) or less; 130 yuan subsidy for purchase price of between 1,000 and 1,500 yuan.

Apart from the above appliances, every province, autonomous region, municipality and city may add one more appliance category to the subsidy scheme, based on the demands of the local rural residents. The added product will receive 13% of the sale price in subsidy, the maximum subsidy of which shall be decided by the respective authorities.

Each household may purchase no more than 2 units for each appliance category under the subsidy policy. The subsidy will be jointly borne by the central and provincial authorities, where the central fiscal budget will bear 80% of the subsidy and the provincial budget 20%. However, the central fiscal budget will bear the full subsidy for the autonomous ethnic minority regions of Xinjiang, Inner Mongolia, Ningxia, Tibet and Guangxi and the 51 counties seriously damaged by the Sichuan Wenchuan earthquake. Staff of state-owned farms and forest farms may enjoy the subsidy.

30.　 Policy to retrofit at-risk  buildings in rural and nongken areas

To ensure the safety of the housing in poor rural residents, the central government expanded the rural at-risk housing pilot project between 2008 and 2010, by broadening the scope of the retrofitting exercise and by increasing funding. During the three years, the central fiscal budget allocated 11.7 billion yuan to subsidise the retrofitting of at-risk homes for 2.04 million poor rural households. On the average, each household received a subsidy of 6,000 yuan. In addition, a further 2,000 yuan is given to every poor rural household located at the land territorial borders and to demonstration households of energy-efficient housing in Tibet and in north-eastern, north-western and northern China.

Apart from ensuring completion of retrofitting works, authorities of the central and western China provinces, autonomous regions and municipalities should develop local subsidy standards that differentiate the subsidy amount for different areas and different types of housing. The subsidy should tie-in with the retrofitting method, construction standard and cost requirements, as well as the financial status of the subsidised household to ensure success in the expanded pilot project. This year, the government will scale up the project, and 1.5 million households are expected to benefit from the retrofitting exercise. Recently, the central fiscal budget has disbursed the first 10 billion yuan to subsidize the expanded pilot project. The central authorities have also announced the inclusion of all counties (cities, districts and banners) of central and western China in the pilot.

To resolve the housing problems of nongken staff, the government launched a housing-retrofitting programme during the fourth quarter of 2008. Retrofitting works will be carried out for at-risk housing projects in six nongken areas, including Heilongjiang Province. The subsidy for each household in the eastern region was 6,500 yuan, 7,500 yuan for the central regions and 9,000 yuan for the western regions. In total, 3.35 billion yuan was allocated from the central budget to retrofit 438,000 homes. Since early 2011, 3.4 billion yuan from the central budget was allocated to support a major retrofitting effort for nongken areas in 24 provinces, autonomous regions and municipalities.