What summer harvest mean to China's economy?
(Xinhua)
Updated: 2004-06-20 10:15

"While being the largest beneficiary of the State's macro-control policies, a good summer harvest will make the government's efforts of macro-control easier," said Feng Huaisong, an official of the Ministry of Agriculture.

Latest statistics from the Ministry of Agriculture show that China's output of summer wheat was expected to increase 2.5 billion kilograms or 3 percent over last year.

"This year's summer harvest was obtained because the central government's supportive policy inspired farmers' enthusiasm to grow grain," said Feng.

Since the second half of last year, while controlling the overheating of some economic sectors, the Chinese government has paced up its efforts to support sectors like agriculture, transport and energy. Policies including direct subsidies and tax reduction at the beginning of this year have encouraged the world' s greatest number of farmers to grow more grain.

The bumper summer harvest eased China's worries over grain security. In the second half of last year, some experts worried that if a favorable turn didn't occur this year, China might really face a grain shortage in the next two years.

With a 1.3 billion population, China has always put grain security high on its policy agenda, especially as grain output has declined for five years running to reach 431 million tons in 2003, lower than the set warning line of 450 million tons. Affected by the international grain market and decline of domestic grain output, the price of major grain crops, like rice and wheat, all went up by a large margin since last October.

Besides, the summer harvest will help curb inflation, said economists. Since the last quarter of last year, because of price increase of grain and some key raw materials, China's consumer price index increased by a large margin. Statistics show that in the first quarter of this year, the CPI increased by 3.3 percent over the same period last year.

Affected by the expectation of a good grain harvest for the whole year and the central government's macro-control policy taking effect, the CPI will drop to some extent in the second half of this year, predicted the State Information Center (SIC).

Economists also hope the harvest could bring more income to farmers, and thus activate the rural market and promote consumption. The expansion of consumption could make up the decrease of investment caused by macro-control policies, and improve economic quality, said Fan Jianping, deputy director in charge of the economic forecasting department of the SIC.

Statistics show that in the first quarter of this year, the income for farmers increased by 9.2 percent year-on-year, hitting an eight-year high.

Though the summer harvest laid a rosy shadow on the picture of China's economy, the Chinese government dared not treat the grain production lightly. Summer-reaped grain crops accounted for only 20 percent of the total output for the whole year. China has set the target for this year's

grain output at 455 million tons, up 25 million tons over last year.

"To fulfill the target, we still have a tedious job to do in the production of early rice and autumn-reaped crops," said Feng.

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