China will increase the number of treasury bonds by 3.25 billion yuan (US$394 million) in a move to boost investment of infrastructure construction in rural areas over the next six months.

The new effort, designed to counter the negative impact of SARS, was revealed at Tuesday's executive meeting of the State Council chaired by Premier Wen Jiabao.

The treasury bonds will be used to bolster funding for construction of electric power, roads, drinking water projects and rebuilding of dilapidated school buildings in rural areas, particularly those the poorest regions.

The move will have a two-fold positive impact in that the building programme will provide work and an income for many rural labourers in addition to vastly improving infrastructure.

The government should concertedly implement various measures to increase farmers' income, one of top priorities on government's agenda, the meeting concluded.

These measures include increasing investment in agriculture and rural areas, and conducting supply and marketing system reform, financial system reform, "fees-for-tax'' reform and medical reform, as well as establishing a contingency handling mechanism.

Also yesterday, at the opening ceremony of the Second Meeting of the Standing Committee of the 10th National Committee of the Chinese People's Political Consultative Conference (CPPCC), Vice-Premier Huang Ju warned that China faces a tough task if it is to meet this year's goal of increasing farmers' income by 5 per cent.

The SARS outbreak resulted in 8 million migrant workers returning to their homes in the countryside during the crisis.

In the last year, income earned by farmers from working in cities accounted for about 41.8 per cent of the total annual increase in income,said Huang.

During the second quarter of this year, the per capita cash income of farmers decreased 35 yuan (US$4.25), 4.5 per cent down compared to the same period last year, according to official statistics.

To reverse this, experts called for more favourable policies.

The government should consider cutting agricultural taxes in rural areas that recorded massive numbers of migrant workers returning from cities for fear of SARS, said Han Jun, a senior expert with the State Council Development Research Centre -- a chief government think-tank.

Such taxes should be reduced by a large margin especially for regions which have been detrimentally affected by both SARS and summer floods, such as East China's Anhui Province, he said.

Despite this, Huang said in his speech at the opening ceremony that he was confident China will achieve its economic growth target in 2003.

Huang said that although SARS has had a certain negative impact on the development of China's economy, the momentum of China's economic development remains strong.

China is keeping its official 2003 growth target at 7 per cent.

The economic figures indicates the China's economy is still on the fast track. For example, the total volume of imports and exports for the first half of this year grew more than 38.9 per cent year on year.

Meanwhile, Huang acknowledged that the industry suffering most severely from SARS is the service industry, a major source of employment in China, and called for close attention to joblessness caused by the disease outbreak.

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