Feng Huaisong, a senior official at the Ministry of Agriculture, said agricultural sectors have become the largest beneficiary of the State's macro-control policies, and a good summer harvest will help the government's efforts tighten macro-control measures.

A 4.8 percent increase in China's summer wheat output this year put an end to a four-year summer grain slump, while the farmers' income growth rate of 16.1 percent in the first half year was an eight-year high, statistics revealed by Chen Xiwen, deputy director of the Office of Central Financial Work's Leading Group, indicated.

But Chen said China is still facing a relatively large-scale grain deficit despite the bumper summer harvest and a possible higher rice yield.

He said there is still a grain deficit of 37.5 million tons despite encouraging signs.

He said the wheat yield this summer has reached 101 million tons, gaining a 4.8 percent year-on-year increase. The rice yield is also expected to rise as the area planted has been expanded by 533,000 hectares this year compared with 2003.

"We can meet a target to produce 455 million tons of grain this year but we have no reason to feel relaxed because the deficit still remains," said Chen.

Since the second half of last year, while controlling the overheating of some economic sectors, the Chinese Government has stepped up its efforts to support sectors like agriculture, transport and energy.

To encourage farmers to plant more grain, the central government has given direct subsidies to crop growers. A total of 1.6 billion yuan (US$192.8 million) was handed out in 28 provincial regions to buy high-quality seeds since October 2003.

At the beginning of the year, the Central Committee of the Chinese Communist Party and the State Council issued the so-called No.1 circular, which contained a basket of new top policies aiming to raise farmers' incomes to help spur on rural growth.

Agricultural tax rates will be slashed by one percentage point this year and taxes on special farm produce will be abolished in line with the document.

Some 600 million farmers will benefit from the fund, worth 11.6 billion yuan (US$1.39 billion) so far, according to a Xinhua report.

At the same time China's local governments are clearing up economic development zones, which have illegally occupied farmland, to make way for grain production.

Xinhua reported that by June this year, 3,763 out of 6,015 such zones across China had been revoked, involving land of 1,600 square kilometers, including 1,100 square kilometers retrieved for farmland.

The government has also set the minimum price level for grain purchase to safeguard the interests of farmers. A series of favorable policies was implemented to help farmers buy fertilizers and agricultural machinery at low prices.

"All these policies, including direct subsidies and tax reduction, have encouraged the world's greatest number of farmers to grow more grain," said Feng.

(China Daily August 6, 2004)