| Problems facing agriculture, rural areas and farmers have a crucial bearing on the country's reform, opening up and modernization drive, and we should never overlook them or slacken our efforts to address them. In recent years, the three rural-related problems are increasingly serious. As economical problems, the issues of agriculture, rural areas and farmers not only have hampered the development of farmer's living standards and farm produce, but also have weakened the industrial products market in rural areas. To make matters worse, farmers can't afford their children's education. As political problems, farmers' heavy burdens strengthened the contradiction between farmers and local government. The growing contradiction not only damaged the character of the Communist Party and government, but also oscillated the consolidation of local regime. As social problems, they oscillated the equality value and affect social equability. Therefore, the problems of agriculture, rural areas and farmers could be the biggest hidden danger in China's economy growth.The phrase "build a well-off society in an all-round way" was first proposed at the 16th National Congress of the communist Party of China held last November. If China wants to bring the wealth of development to its entire people, the primary task is to solve the problem related to agriculture, rural areas and farmers and create a level of moderate prosperity in rural areas. However, in order to solve these problems, it's urgent for us to find out the key root causes of the three rural-related problems. When we find out the causes, we can offer effective solution to these problems.What is the key root cause of the three rural-related problems? The current thinking and measures ranging from industrialization to fee-to-tax seem as if they do not grape the essence. They disregarded the context in which national economy operated and the linkage between agriculture and industry. The rural problems must be considered in the context of the overall situation of the national economy and social development. To solve these problems, it's urgent for us to seek new thinking outside the traditional way.At the beginning of the foundation of new China, the major task is to put forward industrialization as soon as possible. Without experience and theory, we blindly copied a series of practice that former Soviet put into effect. The main practice is transferring agricultural residue to industry so as to accelerate industrialization process. In order to save transaction cost, the Central government gradually established "the Separation system of urban and rural areas". This system attained a large sum of agricultural residue through taxation, fiscal and farm produce distribution. Meanwhile, in support of the task, the government built an establishment that gave urban dwellers and farmerscompletely different treatment in terms of income, education, medicare and welfare. During that time, the industrialization process advanced greatly in China at the expense of agriculture, rural areas and farmers. As the gap between urban and rural areas was not big, the three rural-related problems were not serious.In the end of 1978 the reform of economy system started. Impacted by the implementation of the household contract system, the dual system changed greatly. Planned system of farm produce distribution was eliminated, the People's Commune was dismissed. Since the beginning of reform, urban development was progressed at a much faster pace than rural growth, though the rural economy has made considerable progress as well. The Path-dependence theory show that the Separation system would continued. The reform of the current registration system, the farm produce distribution system, the rural management system and the banking, fiscal, taxation and financing system lagged behind. In rural areas, the allocation of the labor force, land and capital have being planned. Agricultural residue has been transferred to urban areas. The gap between urban dwellers and farmers is growing.
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