Wang Dongjin, vice-minister of labor and social security, said the severe acute respiratory syndrome (SARS) outbreak in the first half of this year sparked a spending spree for medical insurance in cities.

In June alone, premiums hit a record high of 5.9 billion yuan (US$710 million).

Wang revealed the statistics at Monday's inauguration of the Department of Health Economics and Management of Peking University's Guanghua School of Management.

"But the health network is incomplete and is especially fragile in China's rural areas," said Wang.

Gordon G. Liu, newly-appointed chair of the department said the major task of the 10th department of the school is to research how to effectively allocate health resources and investment in China's rural and urban areas.

In Chinese rural areas, there are about 30 million people in poverty and 60 million living close to the poverty line.

According to Chen Xiwen, a research fellow with the Development and Research Center of the State Council, 90 percent of farmers have to pay medical expenses solely by themselves, compared to 60 percent of urban dwellers, while farmers' incomes are about one-third that of urban residents. As a result, many farmers are unable to afford medical treatment.

Wang Longde, vice-minister of health, also said the SARS outbreak this spring awakened policymakers' attention to health and medicare problems for rural people.

He said the Chinese Government has vowed to build a relatively affluent Chinese society in the next two decades, and a key aspect in reaching this goal is to raise the living standards and quality of life of Chinese farmers, who account for 70 percent of the population.

Official statistics show that half of those in poverty in rural areas suffer from diseases.

"From this point of view, without a solution to farmers' medicare problem, it is hardly possible to realize a relatively affluent society in China," said Wang.

The central government is determined to set up an effective welfare system to offer medicare to 900 million farmers, the system is scheduled to be expanded to cover all farmers by 2010.

(Xinhua News Agency December 9, 2003)