March 6, 2009 / 3:04 AM / 9 years ago

Crisis could cause food shortages in rural China - report

BEIJING (Reuters) - The global financial crisis has spread to China’s poorest areas and may lead to food shortages, state media reported, citing vice agricultural minister Fan Xiaojian.

“Since the second half of 2008, the global financial crisis has shown an impact on China’s poor areas,” Fan was quoted as saying by the official Xinhua news agency.

“The poverty reduction process has slowed down and poverty has returned to more areas, which becomes an outstanding issue in poverty alleviation work,” said Fan, who is also in charge of the country’s poverty relief work.

The economic downturn in the United States and Europe has hit China’s export sector particularly hard, forcing the closure of thousands of factories in the eastern coastal regions, and casting many migrant workers out of jobs.

Chinese officials have estimated that about 20 million migrant workers have already lost their jobs due to the closure of export-dependent factories and a downturn in the construction industry.

A large portion of them have remained in their rural hometowns, where they returned for the long Lunar New Year holidays, and officials are concerned that such a large pool of unemployed people could lead to unrest.

In his speech to the opening session of China’s parliament on Thursday, Premier Wen Jiabao made reference to the concern about unrest, saying “We will improve the early warning system for social stability to actively prevent and properly handle all types of mass incidents.”

Fan said that jobless farmers in the poorest areas account for nearly 30 percent of all migrant farmers in these areas, higher than the country’s average of 15.3 percent at the end of 2008.

Fan warned that annual incomes for many rural families could fall ninefold to 400 yuan ($58.48) per person if a couple in a five-member family were to lose their jobs.

In 2008, China’s rural per capita income rose 8 percent to 4,700 yuan, with most of that coming from the salaries of family members working in factories.

Even so, the gap between urban and rural salaries widened, and the latest hardships in rural areas are frustrating government efforts to boost rural incomes.

“The poor areas, as compared with other rural areas, could have more potential land disputes and invest less in agricultural production. Unstable social factors will increase,” he said.

China will expand its poverty coverage to include 40.07 million recipients in poor areas, Wen said in his report to the parliament.

Beijing has also promised to increase spending on agriculture, rural areas and farmers by 20 percent, with much of the money to be spent on rural infrastructure to help create jobs for rural residents.

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