The State Council's decision to double its subsidies for rural medical insurance is good news for the country's more than 700 million rural residents.

Though the supporting sum remains inadequate to cover farmers' basic medical needs, the move indicates an encouraging shift in the focus of public spending.

With rapidly swelling national coffers, the central authorities are at last rising to the challenge of tackling the matter of healthcare in poor rural areas.

On Wednesday, the State Council, China's cabinet, decided to increase its medical subsidies for farmers from 10 yuan (US$1.23) to 20 yuan (US$2.47) a head a year from 2006.

This is accompanied by a range of supportive measures promoting the rural co-operative medical system.

As part of the country's overall heathcare reform programme, the co-operative rural medical system was first introduced in 2003 to facilitate self-help among farmers on a voluntary basis.

Due to insufficient government input to finance hospitals that are mostly State-owned, the country's healthcare reform has largely turned out to be a failure, adding hugely to the financial burden on the public.

While everyone complains about soaring medical costs, rural residents are suffering more than their urban cousins because of a lack of funds, as well as access to quality health services.

Currently, farmers earn on average only one-third of what urban residents make. Most of the country's medical resources are located in cities even though rural residents account for two-thirds of the population.

Poor health conditions make it more difficult to help lift farmers out of poverty; and poverty, in turn, deprives farmers of the chance to improve the state of their health.

To end this vicious circle, policy-makers tried the co-operative medical system, with a small sum of central and local financial support for each rural participant.

But the system has proved to be less than perfect. Due to the limited financial input, the pilot programme still does not benefit the majority of farmers in a significant way. This has dampened many farmers' enthusiasm for participating. Mass involvement is of course a prerequisite for such a system.

The central government intends to expand the pilot programme into a national medical system by 2008.

Increasing government expenditure is a necessary step to make the co-operative medical system more attractive to farmers. But an increase of 10 yuan for each participant is surely far from enough to revive the system. The total cost is not particularly heavy compared to the rapid growth in government revenue.

In the light of unremitting efforts to scrap agriculture taxes in recent years, such small steps to reduce the financial burden on farmers, be it taxes or medical costs, point to a significant shift in public spending strategy.

Clearly, policy-makers are becoming increasingly aware of how urgent the narrowing of the development gap between rural and urban areas really is.

Besides economic policies to boost the rural economy, hefty government expenditure on improving rural healthcare and education is badly needed.

The State Council's decision goes some way to redressing the imbalance in public finances from growth-centred investment towards expenditure on underdeveloped social networks like heathcare and education.

It is hoped this trend will continue to further benefit the nation's many farmers.