Urban-Rural Integration Reform in Progress

By staff reporter LUO YUANJUN

An executive meeting on February 7, 2014 presided over by Li Keqiang, Premier of the State Council, China’s cabinet, decided to merge the old-age insurance schemes for rural and urban residents into a unified pension system, marking a major breakthrough in urban-rural integration. Previously, China had different pension schemes for civil servants, urban employees, urban residents and rural dwellers. The new pension program is a long-awaited reform, bringing an end to the country’s dual urban-rural structure.

Better Social Security for Farmers

Xiao Jun, a migrant worker from Chongqing Municipality in southwestern China, has been roaming from one city to another in the Pearl River Delta for a dozen years, working over 10 hours a day. His monthly wage has steadily climbed from a few hundred yuan to over RMB 2,000 during the past years. But his savings are still meager. “I spent most of my earnings on my family. So I have nothing to fall back on in my old age – except my children,” he said.

It is commonplace in China’s countryside that seniors rely on their adult children for financial support. Annuities for rural residents didn’t appear in China until 1992 when the Ministry of Civil Affairs promulgated an outline for a trial implementation of a social pension system for farmers at county level. The program was later adopted by some regions, but eventually fizzled out. As the funds came solely from pensioners’ contributions, the plan was nothing more than a glorified bank deposit system. Farmers saw no point in joining it when the expected retirement benefits would, in fact, come entirely out of their own pockets. What’s more, the early 1990s average rural income was low. Few families had money to put aside for 30 or 40 years down the line when they were struggling to pay for daily necessities in the here and now.

In September 2009, the State Council trialed a new old-age pension system for rural residents in parts of China. Under the policy, participants regularly contributed premiums, whose amounts they decided, to individual insurance accounts also funded by central and local governments, and in some regions by the participants’ communities. On reaching 60 years of age, policyholders could start to receive payments from their accounts plus a RMB 55 “basic pension” from the state. Farmers who were 60 or over at the inception of the program were still entitled to the basic pension despite having made no personal contributions. By 2012 this program had largely covered the entire rural population of China.

Balanced Rural-urban Development

Every year the “No.1 Central Document,” the first policy document issued by the Central Committee of the Communist Party of China and the State Council, signifies the priorities of government work in the year. This year, amid other reforms, the government vows to improve the mechanisms for coordinating urban and rural development by improving rural living conditions and providing equal basic public services in urban and rural areas. The goal is to ensure even exchanges of production factors between the city and the countryside to give farmers equal access to the modernization process and its benefits.

This demands replanning of urban-rural development that can improve the distribution of industrial projects in cities and urban areas to utilize their respective advantages, boost free flow of urban and rural labor, and ensure rational use of key production factors such as capital, land and technology. In 2009, Zhuozhou City of Hebei Province was selected as a testing ground for this restructuring.

According to the city’s plan for its downtown area, towns and villages, its territory of 742 square kilometers is divided into a central area, five clusters of bigger towns and 49 conglomerations of smaller towns that cover all 404 administrative villages. This layout is expected to stimulate population flow from rural neighborhoods that scatter sparsely across the region to towns, where new communities with modern amenities will be built.

By pooling residents of several villages, these new communities can make better use of land. They can also make overall plans for housing, transport, and infrastructure of utilities, communications, education, public security and recreation. Each will build a kindergarten, primary school, elderly care home, hospital and sewage treatment plant. And every household will have its own garage and warehouse. This concentration of population and resources helps foster a more efficient and convenient lifestyle.

Zhuozhou is also experimenting with the farm economy pattern in the agricultural sector. It merges small plots of farmland contracted to individual rural families through land transfer, and establishes bigger plantations by introducing corporate investment and modern management. The city proactively solicits urban capital to invest in such plantations. This creates jobs for resident farmers, boosting their incomes and bringing about favorable interactions between industrialization and the rural population.

In short, the replanning for urban and rural areas aims to achieve optimal allocation of resources and maximum use of infrastructure and public services, also to assign cities and the countryside the respective roles they can best play in national economic and social development. This can make the best out of resources and capital, improve livelihoods and the eco-environment and create better living and working conditions in rural areas.

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