Farmers inspect tractors at a dealership in Tangyin County, Central China's Henan Province. [Asianewsphoto]

Rural areas have massive potential for change and the direction and consumption trends adopted by approximately 200 million families across the nation are expected to help sustain China's slowing economy.

The State Council has recently repeated the strategy of "further tapping the consumption potential in China's massive rural regions" when it reported to the National People's Congress on its economic policy portfolio for the next half of the year.

The move is a timely policy adjustment as China's investment- and trade-driven economy has already faced hurdles at home and abroad. It also is in line with the government's aim of improving the welfare of farmers.

Recently the government has taken measures in rural regions to improve infrastructure and rural productivities. In 2007 alone, the central government allocated 420 billion yuan from the treasury for rural development, a sum which is almost equal to total government spending in rural areas between 1998 to 2003.

As a result, many farmers in China's 2,800 counties have benefited from the large funds received from the central government. Much of the money has been channeled into providing new schools and hospitals in towns and villages as well as being used to improve infrastructure.

"This has brought new life for the rural regions as it has created many jobs for rural surplus labors," said Guo Hongmei, an official from Sichuan's mountainous Tongjiang county.

She said most of Tongjiang's farmers have benefited from the rural cooperative healthcare scheme.

In 2004 lack of finance for medical treatment was the cause of 26 percent of all deaths in the county. Today the figure is 5 percent.

"Many farmers I encounter these days have plans to rebuild their homes," said Guo.

The central government has massively expanded its expenditure in agricultural and rural social undertakings with a 30 percent year-on-year increase this year, reaching a record high of 562.5 billion yuan. This should be used to boost agricultural productivities, increase the farmers' income and improve the farmer's living conditions in the villages.

Following a 9.5 percent annual increase last year, Agriculture Minister Sun Zhengcai said per capita income for people in China's rural areas rose 10.3 percent in the first half of this year, the greatest increase in four years. This is the result of the skyrocketing producer price index, the rising payment of migrant labor and the growth of subsidies paid to the country's farmers.

However, compared with urbanites, the income level for farmers is still low. With the urban per capita net income at 13,786 yuan, against 4,140 yuan in the countryside, the ratio was 3.3:1 last year, the highest since China launched its reform and opening-up policy in 1978.

Furthermore, farmers will also be affected by the price hikes. Currently, a ton of steel is priced at 5,500 yuan, representing a 30 percent rise from last year. Other materials have also experienced different degrees of price hikes.

"The farmers are calculating again and again how much they will spend on their new houses," said Guo from Tongjiang county, adding that on average a new house in a rural region cost about 100,000 yuan.

"That's still a big sum for the average rural household in my county," Guo said.