Better roads will bring bigger markets

The increased spending forms part of a push to close the wealth gap between town and country.

It will pay for transport links, new rural industries, schools and welfare services.

China's top governing bodies warned on Sunday that stagnant farm earnings were putting stability and growth at risk.

A report from the cabinet-level State Council and the ruling Communist Party's Central Committee ordered officials to pay more attention to meeting rural development targets.

'Fairly grim'

It warned of falling grain production, unveiled tax cuts on farm produce and pledged to modernise agriculture and rural industry.

The wealth gap is growing fast

The extra funds mean China will spend a record $18bn this year on rural infrastructure.

"As farmers occupy such a big proportion of China's population it is very important to increase their income at a faster pace," said Chen Xiwen, who is deputy head of the State Council's main economic policy think tank.

"Fairly grim" was how Mr Chen chose to describe the growth of farmers' earnings in the six years since 1997 at a news conference on Monday.

Such admissions are part of a shake-up of policy towards farmers and migrant workers.

Grain and growth

Mr Chen said rural incomes were roughly one third of urban ones, averaging 2,600 yuan ($320) compared to the 8,000 yuan pocketed by those living in towns.

Many have left for the factories

Urban incomes grew faster too, up 9.3% last year, compared to 4.3% in the countryside, the National Statistics Bureau said.

"If we don't raise their income, we won't be able to increase domestic spending," he said.

Strong consumer spending is seen as vital to maintain economic growth.

China's authorities recognise that rapid economic growth is swallowing farm land to build industrial parks, which need millions of migrant farmers-turned-factory hands to work in them.

But it is also worried about grain harvests, which Mr Chen said fell 5% in 2003.