CHINA'S economic growth of 10.3 per cent last year drove the biggest increase in the nation's rural incomes in 25 years, bolstering efforts to spur consumption.

In the countryside, per capita net income rose 10.9 per cent to 5919 yuan ($900), a statistics bureau report showed on Thursday.

The gain was faster than for urban incomes for the first time since 1997. The report also showed an acceleration in retail sales and industrial production at the end of last year.

The US President, Barack Obama, this week pressed President Hu Jintao for greater access for American companies.

Wang Tao, an economist at UBS in Beijing, said: ''Faster rural income growth is a result of China's economic rebound and booming construction across the nation, which boosted migrant workers' employment and wages. There is a vast rural market to tap and the key is to boost jobs and incomes for farmers.''

During the financial crisis China introduced subsidies for purchases of home appliance and vehicles in rural areas, aiding manufacturers. Last year 173 billion yuan of home appliances were sold under the stimulus program, according to Ministry of Commerce data.

Agricultural price increases contributed to the gain in farmers' incomes last year. In the countryside, income gains were ''largely due to government policies favouring farmers and agricultural production, increased health-care coverage and the removal of taxes and fees on farmers in the past few years'', said Ken Peng, a Beijing-based economist at Citigroup.

He also cited food-price increases and said that the pace of future gains might depend ''on how much the government will maintain policies in favour of rural households''.

Officials have indicated that the next five-year plan, running to 2015, will have a renewed focus on boosting consumption to reduce dependence on investment and exports.

Policymakers have for decades sought to narrow the gap between inland provinces and coastal export powerhouses.

President Hu has made the reduction of income disparities the centrepiece of his promise to create a "harmonious society".

However, Thursday's report also showed the difference that remains: the average urban disposable income rose 7.8 per cent to 19,109 yuan, still more than three times the rural figure.

Japan's Economy Minister, Kaoru Yosano, said the figures showed it was ''probably the case'' that China had overtaken Japan as the world's second-biggest economy, a ranking likely to be confirmed when Japan reports gross domestic product on February 14.

Mr Hu, who travelled to Chicago to talk with business executives on Thursday, said that China was focusing on domestic demand and consumer spending as its economy evolved.

Bloomberg