The Chinese government will spend 339.7 billion yuan (42 billion U.S. dollars) in agriculture, rural areas and farmers this year, which is 42.2 billion yuan, or 14.18 percent, more than last year, Premier Wen Jiabao said here Sunday.

The target, along with plans to shift the government's priority in infrastructure investment to the countryside, to completely rescind agricultural tax and to increase input in rural education and medical care, signifies the drive to "build a socialist new countryside" will unravel in all fronts this year, observers say.

"We need to implement a policy of getting industry to support agriculture and cities to support the countryside, strengthen support for agriculture, rural areas and farmers, and continue making reforms in rural systems and innovations in rural institutions to bring about a rapid and significant change in the overall appearance of the countryside," Wen said in a report on the work of the government at the annual session of the national legislature.

To build the "new countryside," the Central Committee of the Communist Party of China has set objectives including "enhanced productive forces, higher living standards, civilized living style, an orderly and clean environment, and democratic administration."

China is an agricultural country traditionally, and old-style farming lasted for thousands of years in most areas. Like any other countries, China had drawn a huge sum of funds for industry development from agriculture and rural areas in the initial stage of industrialization and urbanization since 1949, resulting in yawning gap between the city and the countryside.

To narrow the gap, the government has kept increasing central fiscal expenditure on agriculture, rural areas and farmers over the last few years. In 2005, the fund from the central budget and T-bond proceeds to support agriculture, rural areas and farmers reached 297.5 billion yuan (36.7 billion dollars), which was 34.9 billion yuan more than in 2004 and over 100 billion yuan more thanin 2002. The capital inputs of many localities for this purpose also reached a record high.

This year, said Wen in the report, priority will be given to developing modern agriculture and promoting steady expansion of grain production and sustained increase in farmers' incomes.

"We will further increase direct subsidies to grain producers, subsidies for growing superior grain cultivars, and subsidies for agricultural machinery and tools," Wen said.

"We need to resolutely work to reorient investment by shifting the government's priority in infrastructure investment to the countryside. This constitutes a major change," he said.

The fund will be mainly used for strengthening basic development of farmland, accelerating construction of infrastructure projects such as roads, drinking water supplies, methane facilities, power grids and communications