China cuts back taxes after peasant protests

THE Chinese government, worried about increasing unrest in the countryside, has ordered local authorities to drop a long list of taxes and fees often arbitrarily imposed on the country's 900 million peasants.

There have been demonstrations and outbreaks of violence in several rural areas recently over economic grievances. The most serious was in Sichuan, one of China's most populous provinces, where farmers set up road blocks, attacked local party officials and wrecked their homes and offices late in May over the imposition of a tax to build a new road. Paramilitary police were sent in early this month after several days of trouble, firing tear-gas to disperse thousands of stone-throwing peasants.

Rural rebellion has traditionally been an alarm signal to Chinese rulers, but the State Council, the country's Cabinet, is finding it increasingly difficult to maintain central control. The latest list of taxes to be abolished, including fees for 'social stability', land registration and even 'toilet improvement', is very similar to one issued in May, implying that local authorities had not heeded the earlier ban. One reason for the Sichuan upheaval was that provincial officials had ignored orders from Peking that levies should not exceed 5 per cent of a peasant's income.

China's economic boom began when farmers were freed to make money, but in the past few years rural incomes have fallen well behind those in the cities. The country's breakneck growth is now being fuelled by competition among provinces to invest in prestige projects such as hotels and assembly plants, often with little reference to Peking. Apart from taxing the countryside to pay for such indulgences, provincial authorities are also delaying payment to peasants for their crops - earlier this year, unpaid IOUs in the nine main grain-producing provinces had reached 2.75bn yuan (pounds 300m).

Peking also fears that rising inflation, produced by economic overheating, will add to rural dissatisfaction. The Communist Party leadership, which began to take alarm at the 1989 democracy movement only when students were joined by farmers and workers angered by the erosion of their incomes, finds the intellectuals much easier to control. A Hong Kong newspaper reported yesterday that police in Peking are holding Guo Baosheng, a philosophy student who tried to launch a petition against the Prime Minister, Li Peng, two weeks ago, during the fourth anniversary of the Tiananmen Square massacre.