The Scale And Structure Of Financial Support On Agriculture And Urban-rural Residents’ Income Gap

Since the reform and opening-up, economic growth of China has made remarkable achievements, one after another "miracle" have been created in economic world, both overall economic strength and resident’s income have been increased dramatically. However, non-balanced growth, especially non-balanced income growth between urban and rural residents have highlighted, which result in the increasingly income gap between urban and rural residents. Less agricultural inputs, low productivity, surplus rural labor, product price difference in urban and other factors lead to the low level of development of agriculture, which results in non-balanced income growth between urban and rural residents and the increasingly income gap between urban and rural residents.This study found that in addition to the fragile of agriculture as well as urban and rural dual system and a series of internal and external factors, the low scale and less rational structure of financial support for agriculture are also lead to urban and rural residents’ income gap. The scale of financial support for agriculture has inhibitory effect to the income gap, but the declining share of financial support for agriculture in total financial plays a significant widening effect, these indicators are different perspective reflection of agriculture financial support, so the suppression effect of scale of fiscal expenditure on agriculture to urban-rural income gap is not obvious after the offset of the two indicators,, which is consistent with the current situation. The radical cause of suppression effect of improving farmers’ income and suppressing the income gap is the unreasonable structure of financial support for agriculture. The non-productive sector funds squeeze the productive expenditures and other expenditures, resulting in the inefficient use of Financial Funds; The low level expenditure of agricultural technology and infrastructure fails to give full play to the economies of scale and long-term effects of these two expenditures; Rural relief expenses could significantly inhibit the income gap, but the effect’s period is very short so that this expenses just directly improve farmers’ income in the short term. Therefore, such an inefficient fiscal expenditure on agriculture can’t perfectly meet the requirements for the development of modernization of agriculture, it is the only way to narrow the income gap between urban and rural areas that deepen the reform of financial support for agriculture.Combined with empirical research results as well as the reality of China’s agricultural development and the growth status of farmers’ income and the new direction of development of agricultural modernization, I believe that in order to improving farmers’ income and suppressing the income gap something reform must be done as follows:on the one hand, It is an important direction at this stage that increase the scale of financial support for agriculture appropriately and steadily, and optimize its structure on the relatively limited scale of financial support for agriculture, then gradually get rid of fiscal dual system, appropriately increase the share of financial support for agriculture, radically reduce non-productivity expenses; increasing the technology and infrastructure spending by a big margin, which give full play to the economies of scale and long-term effects of these two expenditures; appropriately and steadily increasing rural relief funds, which directly increase the income of the farmers in the short term. On the other hand, the most important thing is the construction and perfection of the system of fiscal expenditure on agriculture, it is well-known that financial support for agriculture is not a numbers game, but a long-term project, it is the only way to improve agricultural modernization that improve the formation of long-term financial support for agriculture mechanism. The long term mechanism of financial support for agriculture ask for agricultural funds playing a leading role in improving the rural land transfer system and innovating of rural land use and innovating rural management system as well as improving the agricultural science and technology service system.To sum up, the urban-rural residents’ income gap is the result of various factors, it is comprehensive and long-term projects that achieves the farmers’ income growth quickly and narrow the income gap between urban and rural areas. Enhancing the scale of fiscal expenditure on agriculture and optimizing its’ structure and innovating fiscal system are government-led major measures to adjust income distribution in urban and rural areas, only by improving the efficiency of the use of funds of financial support for agriculture can we really realize the modernization of agriculture, increase farmers’ income, narrow the residents’income gap between urban and rural, as well as achieve stable and healthy development of China’s economy and society.