Oct. 13 (Bloomberg) -- China's Communist Party aims to double rural incomes in a bid to boost domestic consumption amid global financial turmoil that threatens to slow economic growth.

The government aims to achieve those goals and eliminate ``absolute'' poverty in rural areas by 2020, the party's ruling Central Committee said in a statement distributed late yesterday by the official Xinhua News Agency.

The report gave no details on changes such as extending the tenure of farmers' leases and boosting their ability to trade and borrow against land. State-media reports and analysts had highlighted land-use rights reform as the major potential outcome before the meeting.

China's party leaders, who met Oct. 9-12 in Beijing, have made ``harmonious development'' a cornerstone of their policy, shorthand for addressing income disparity and uneven expansion in the world's fastest growing major economy. Unleashing the economic power of the 737.4 million people who live in the countryside has taken on added importance as China faces a global slowdown.

``Maintaining employment and household consumption will be a key objective for government policy'' in the face of the international financial crisis, Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co. in Hong Kong, wrote in an e- mailed report today. Agricultural reforms will be ``positive'' for ``rebalancing the sources of economic growth,'' she said.

`Lagging Behind'

Per capita income of China's rural residents was 4,140 yuan ($606) in 2007, less than a third of per-capital urban disposable income, according to government statistics. The rural population mired in absolute poverty was 15 million, compared with 250 million in 1978.

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, has slumped 64 percent this year through Oct. 10. Morgan Stanley this month cut its 2009 economic growth forecast to 8.2 percent, from 9 percent, while UBS AG reduced its estimate to 8 percent. The economy grew 11.9 percent last year.

``Rural development is lagging behind and needs support, farmers' income increases slowly and needs speeding up,'' Xinhua cited a work report delivered by President Hu Jintao at the meeting as saying.

The government is moving to strengthen the supporting institutions, such as rural credit providers, that can help make the land-use rights farmers already have ``really functional,'' said Li Ping, Beijing representative of the Seattle-based Rural Development Institute.

Transfer Rights

The nation aims to boost rural banks and lending firms to 100 by the end of the year, from 61 at the end of August, in a bid to improve farmers' access to credit, the banking regulator said on Oct. 8.

Another change that the government may make is to allow farmers to transfer rights to the 12.3 million hectares (30.5 million acres) of rural residential land, which is classified separately from farmland, according to Li. That would give farmers who wanted to sell access to capital and income, and also aid companies in need of land to develop.

A Xinhua commentary said that China should give farmers ``more comprehensive and secure'' land rights to boost rural productivity and speed up reforms.

Hu pledged to ``allow farmers to transfer the right of land contract and management by various means,'' during a symbolic Oct. 1 visit to Xiaogang, the village in the southeastern province of Anhui where China first initiated rural reform in 1978, according to Xinhua.

Extending land-leasing duration and other policies to strengthen farmers' rights to trade land would improve economies of scale in agricultural production and fuel growth in rural finance, according to Frank Gong, JPMorgan Chase & Co.'s Hong Kong-based chief China economist.

To contact the reporter on this story: Dune Lawrence in Beijing at dlawrence6@bloomberg.netXiao Yu in Beijing on yxiao@bloomberg.net

Last Updated: October 13, 2008 04:40 EDT