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The People's Bank of China (PBOC), China's central bank, announced last week it would relend 33. 3 billion yuan (US$4 billion) to rural credit co-operatives.

The central bank asked the co-operatives to make full use of the funds to support agricultural production and increase farmers' income.

The move showed that the State is enhancing its efforts to increase rural consumption, which remains bearish while urban residents have begun to spend more.

According to State statistics, the growth of retail sales in rural areas in the first six months of the year was 1.8 percentage points lower than the growth in the urban areas.

As farmers account for two-thirds of the country's total population, if consumption in rural areas cannot be stimulated, the full expansion of domestic demands, a strong engine for economic growth, will not be realized.

Farmers' weak buying enthusiasm is mainly attributed to their low income. The growth of farmers' income has dropped in recent years, from nine percent in 1996 to 3.8 percent in 1999. The per capita cash income for farmers in the first six months rose only 1. 5 percent to 1,013 yuan.

(Xinhua)