China will boost spending in rural areas and let more farmers migrate to urban areas in a bid to close the widening income gap between villages and cities, government officials said on Monday.

China’s leaders are worried about lagging rural areas, where thousands of protests a year over living conditions and perceived government indifference threaten to undermine social stability.

An exact figure has yet to be announced but Chen Xiwen, director of the Central Rural Work Leading Group, a government advisory body, said the increase in spending on agriculture and rural areas would be proportionally much higher than the central government’s overall budget increase this year.

A text of the policy released on Sunday said the measures were intended to help “expand rural demand as a key step in stimulating domestic demand.”

Beijing is trying to encourage its consumers to spend more to reduce reliance on investment and weak exports to drive economic growth.

This will mark the sixth consecutive year that China has boosted its budget for rural areas, Mr. Chen said. Last year, the government spent 764.1 billion yuan ($111.8 billion ) - up 120 billion yuan from the previous year.

“One thing is for sure: the increase in fiscal spending in rural areas will be much higher than the overall increase in China’s fiscal input this year,” Mr. Chen told a news conference. The exact amount is to be announced at the annual meeting of China’s legislature in March, he said.

Mr. Chen said new investment, loans, training programs and subsidies would be part of a package of measures designed to help farming villages, where incomes have grown but failed to keep pace with urban income growth. The government’s statistics bureau reported last week that China’s urban residents made 3.33 times more than their rural counterparts in 2009, up from 3.31 in 2008.

The government will also allow more farmers to migrate to cities and receive the housing, insurance, social security, education and other benefits that urban residents enjoy, said Tang Renjian, deputy director of the Central Rural Work Leading Group.

About 60 percent of China’s 150 million rural migrant workers are 30 years old or younger, Mr. Tang said. Most are better educated than their parents but have limited knowledge of farming and little interest in it.

“They want to become part of the city and embrace a civilized life in the city, but at the same time cities are not ready to accept this new generation,” said Mr. Tang. “Helping them become urban residents will be a top priority.”

The planned investment will subsidize crops such as barley, peanuts and potatoes and be channelled into funds so farmers can buy agricultural machinery and new building supplies to renovate their homes.

The government will introduce more policies to encourage the purchase and stockpiling of soybeans, corn and edible oil to help stabilize the price and supply of such staples.

China imported 425.5 million tons of soybeans and 81.3 million tons of edible oil in 2009 - both record highs, Mr. Chen said.

“We need to improve our agricultural sector and make it more modernized, otherwise these shortages will not be limited to only these two products but will affect other products as well,” he said.

RELATED NEWS

2010 ‘most complicated’ for economy: Wen February 27, 2010

More In: International | News