In mid August the Ministry of Labour and Social Security announced it will try to streamline the national social security system by implementing several new measures.

By helping unemployed and laid-off workers qualify for endowments, unemployment and healthcare insurances, the ministry is determined to provide relief for some of the country's needy.

These measures, however, are only aimed at urban residents.

While there is no doubt the current administration has made impressive strides in improving the social security system in cities and towns, providing the same coverage to rural residents remains a daunting task.

Under the current system, an urban dweller automatically qualifies for pension and healthcare insurance once he or she finds employment.

By contrast, most members of the rural population can only rely on their land for income because the State only extends aid to some ultra poor in rural areas.

As a result, the rural residents who account for nearly 70 per cent of the nation's total population only absorb about 11 per cent of the total social security expenditure while the other 89 per cent is spent on urban residents.

This disparity has contributed to the growing gap between the living standards of rural and urban populations.

Another factor contributing to the urgency of establishing a social security system in rural China is the aging population. In 2001, 7.1 per cent of China's residents were 65 years of age or older.

With 70 per cent of the elderly living in rural areas, the need to provide adequate social security becomes even more acute while the family planning policy, which has been in effect about two decades, helped create more nuclear families in the rural areas. As a result, the average rural adult has to take care of more ageing relatives.

The blueprint for China's rural social security system should address three basic needs: cost for maintaining minimum standard of living; healthcare fees; and old age pension.

The average income of farmers has been slowly increasing for years, but many rural families are still suffering from poverty. Setting up a system guaranteeing the minimum living standard for rural residents would help ease their worries and stabilize society.

Establishing such a system will require a series of measures. Above all, a law should be drafted to address relative issues about such a system.

Then policies should be worked out to grant favourable treatment to poor farmers, such as tax cuts and free education.

Another primary concern for rural residents is healthcare.

The new security system should try to ensure that the rural people, the majority of the nation's population, can get basic medical services.

Healthcare insurance fees for farmers should be divided among the farmers and the collective economic entities like villages and local governments, but the specific standard, financing method and management should be adapted to the real situation of different parts of the nation.

That same principle should apply to rural old age pension insurance.

For rural residents in coastal areas who are better off on average, the sum of old age pension insurance should not be the same as their counterparts in poverty-stricken regions. And fees for old age pension should be solely paid by the farmers themselves.

Knowledge about old age pension should also be popularized among farmers to help them better accept the practice.

The author is a researcher with the State Information Centre's Department of Economic Forecast.

(China Daily September 10, 2003)