Extending pension to rural residents is an important step towards an equal social security system. It is another milestone policy by the central government after the abolition of agricultural tax and launching of the rural medical care cooperative system.

The pension scheme for villagers above 60 will start on a trial basis from October, according to sources with the Ministry of Human Resources and Social Security on Wednesday.

For farmers, who depend on income from the fields and have no provision for old age, this is undoubtedly good news. On a trial basis, a basic pension account will be established and supported by the central government; the pension would also be supported by local collectives and the rural residents themselves.

The move, if implemented throughout China in a couple of years, will end the history of villagers who have never enjoyed a penny as pension from the State.

To rely on their children in old age has been the only way for villagers until now. Regardless of age, they have to work in the fields as long as they can, unless provided for by their children.

In decades past, particularly before 1980, China's industrial development and urbanization had been at the cost of the interests of the rural population. Eighty-nine percent of State expenditure in social security was enjoyed by urbanites, who made up 30 percent of the population, while villagers got the remaining 11 percent.

With economic growth and consequent rapid increase of State revenue, it is natural that the central government should establish such a pension system. And, it is also the responsibility of the State to let villagers share the fruits of economic reform and growth.

Despite double-digit growth in recent years, the economic imbalance between the rural and urban areas persists. The income gap between the urban and rural residents has further widened, and increasing rural income has been a priority on the central government's agenda.

That explains the abolition of agricultural tax from 2006 and increased State inputs for the new medical care cooperative system for rural residents last year to let them enjoy cheaper medical service.

The pension system, though on a trial basis for now, is a continuation of this policy. The sources did not say how much money an old rural resident will get as pension. But, the portion from the State, along with the corpus accumulated annually from the rural residents and the funds from the collective, would suffice to meet their basic needs.

With one major worry in life - subsistence, including medical services - taken care of, rural residents may be expected to spend more and contribute to the economic recovery. Such State policies in favor of rural residents will not only make distribution of wealth fairer, but also help stimulate the economy.

(China Daily 08/06/2009 page8)