Zhang Yunluo, a young farmer in China's eastern Shandong Province, started his heater production plant after returning home in December last year from Tianjin.

The foreign-funded firm at which he worked had been hit by slumping orders due to the economic downturn -- and Zhang, 27, paid with his job.

"It's good to stay close to my parents in the village. The first batch of energy-efficient heaters has just rolled off the production line. I believe they have a market, as farmers are more price aware of their power bills because energy price rises," Zhang says.

"I hope to sell 7,000 sets of heaters worth more than 1 million yuan next year," Zhang adds.

A year earlier, such hope would have been incomprehensible.

He was one of millions of migrant workers returning home at the end of last year as factories closed or slashed production.

China had about 225 million migrant workers by the end of 2008.

"I decided it might be a good timing to start my own business. I have worked at foreign-funded firms in Beijing, Suzhou City and Tianjin as a salesman and technician. My city experience helped in a business plan."

Timely help

About 100,000 yuan (US$14,640) of his hard-earned wages and relatives' money went to the 400-square-meter workshops and machinery.

"Village heads gave me a preferential policy for using the land to build workshops. I only pay 2,000 yuan a year, as my factory is the first company set up in this village of 1,500 residents," Zhang says.

A deputy town head would introduce him to property developers of neighboring towns. They are Zhang's ideal potential clients.

The city government halved Zhang's annual business tax rate to 1.5 percent, in line with measures taken by local governments nationwide to support returning migrants' business dreams.

"Working capital shortage was my biggest problem. The low land rentals, promotion opportunities and lower tax rates were a timely boost to my small factory," Zhang says.

Better lives

After seven years away from home, he now employs seven villagers.

"Two technicians can get a monthly salary of 1,500 yuan, while the other five support staff can earn more than 400 yuan a month," Zhang says.

In big cities like Beijing, 400 yuan can only buy a family a big meal, but in Chinese rural areas, 400 yuan a month is substantial money.

The per capita net income of Chinese farmers hit a record 5,000yuan in 2009, up 6 percent from 2008, according to a statement from the annual Central Conference on Rural Work.

"My employees are all older than me. They are of the 'sandwich generation', who have to take care of their parents and children. So they prefer to stay in the village to work," Zhang says.

"I believe my life will get better and so it will for my employees. I bought a government-subsidized washing machine to wash employees' work clothes. Several workers have bought washing machines and color TV sets with subsidies and income rises before the New Year," says Zhang.

More than 81.8 million household appliances, including mobile phones and TV sets had been bought by rural families by Dec. 12, a total sales value of 143.6 billion yuan, boosted by the government subsidy that took effect nationwide since in February, Ministry of Commerce figures show.

Raising farmers' incomes by supporting their business plans and boosting their consumption can narrow the long-existing economic gaps between rural and urban areas, says Zheng Fengtian, vice dean of the Agriculture and Country Department of Beijing's Renmin University of China.

"Farmers' incomes are still low compared to city dwellers. They need better financing services to fund start-up businesses and a better social safety net in the process of China's urbanization," Zheng adds.

Experts say successful village firms like Zhang's give farmers job opportunities near homes, improve consumption and encourage urbanization.

Chinese farmers are afraid of spending, because they have low incomes and lack welfare, says Jing Linbo, vice director of the Institute of Finance and Trade Economics under the Chinese Academy of Social Sciences.

Many capital-deprived Chinese farmers face financing difficulties, as they lack proper mortgages and business credit to get access to loans, although the government is trying to improve finance for farmers.

New agriculture and farming-related loans rose 27.6 percent year on year to 1.54 trillion yuan in the first half, says Liu Zhenwei, vice chairman of the Agriculture and Rural Affairs Committee of the National People's Congress.

"I think I can get loans next year, if business goes well. I want to add a new production line and more villagers to my payroll. Many villagers are my relatives, and I hope their lives get better," Zhang says.

(Xinhua News Agency December 30, 2009)