By Xiao Junyan

Steady performance has been the main feature of the rural economy and the market of farm products in the first half of the year. The rural economy continued to undergo structural adjustment, grain-growing area became more stable, cotton-growing area dropped drastically, and the cultivated area of other cash crops increased. While the prices of farm products continued to be sagging, the development of rural enterprises was steady. Rural financial services for agriculture improved somewhat; peasant income slightly increased; and the trend of the import and export of farm products was excellent. Overall, the environment for the performance of the rural economy was not so liberal. But it was noteworthy that in the first half of the year, the state introduced a series of reform and policy measures, which would help improve the environment for the development of the rural economy and especially for the alleviation of the peasants' burdens.

I. The Basic Trend of the Rural Economy in the First Half of the Year

(1) Farm production

The cultivated acreage of early rice in 2002 was 5.9 percent less than that of last year, covering nine main early-rice producing regions. The cultivated acreage of spring wheat was 8.7 percent less than that of last year. The main reasons for the reduced acreage of early rice and spring wheat cultivation was that after the spring wheat in the north and the long-grained non-glutinous early rice in the south quit from the state's protective prices, their comparative efficiency declined. As a result, the peasants continued to reduce their cultivation acreage. Besides, the prolonged cold rains in the middle and down streams of the Yangtze River in April and May made it impossible for some places to grow early rice in time.

The total output of summer grains in 2002 was 98.77 million tons, which was 2.9 percent or 2.96 million tons less than that of last year. The areas where summer grain output reduced considerably are mainly the Yellow River-Huaihe River region, the Yangtze River-Huaihe River region and the Yangtze River-Hanjiang River region. There are two main causes of the reduction in summer grain production. One is that after late April, the continuous rains in the above regions were extremely unfavorable for wheat to be in the milk and ripen. The summer grain output nationwide in 2002 was 60 kilograms per hectare less than that of last year, and reduced single crop output affected the total grain output by 1.66 million tons. The other is that the cultivated acreage of summer grains nationwide was 1.3 percent less than that of last year, resulting in an output decrease of 1.3 million tons.

(2) Peasant income

The per capita cash income of the peasants in the first half of the year was 1,123 yuan, or 60 yuan more than that in the same period of last year. If price factors are taken into account, the actual growth was 5.9 percent, or 1.7 percentage points higher than a year earlier. The main features are:

1. The peasants' cash income from the selling of farm products continued to grow. In the first half of the year, the per capita cash income of the peasants from the selling of farm products was 469 yuan, which was 6.8 percent or 30 yuan higher than that in the same period of last year. The growth was 1 percentage point higher.

2. The peasants' cash income from the non-farm industries posted a steady growth. In the first half of the year, the per capita cash income of the peasants from the non-farm industries was 566 yuan, which was 5.2 percent or 28 yuan higher than that in the same period of last year. This steady growth was attributed to the fact that more peasants left their native places for non-farm occupations. Their increased income accounted for one-fourth of the cash income growth in the first half of the year.

3. The peasants' tax and fee burdens continued to fall. In 2002, China's experiment on reforming rural tax and fee collection expanded to 16 provinces and autonomous regions in the central and western regions. This helped increase the peasants' income. In the first half of the year, the per capita spending on taxes and fees nationwide was 18 yuan, which was 0.7 yuan or 3.9 percent less than that of the same period of last year.

(3) Township enterprises

The main features of the economic performance of the township enterprises in the first half of the year were as follows:

1. Their total economic amount was on a steady rise and their economic performance was excellent. In the first half of the year, the township enterprises nationwide realized a total added value of 1,505.5 billion yuan, or 8.8 percent higher than that of the same period of last year, of which, the industrial added value was 1,047.6 billion yuan, or 8.9 percent higher than that of a year before; the operating revenue totaled 8,281.6 billion yuan, or 8.7 percent higher than that of a year before; the value of export delivery totaled 478.8 billion yuan, a growth of 11.3 percent over a year before; the profit was 344.6 billion yuan, or a growth of 8.3 percent over a year before; the tax paymen totaled 135.8 billion yuan, a growth of 9.9 percent over a year before. All these indicators maintained a coordinated and steady growth.

2. Their industrial production grew steadily and their production and marketing were well dovetailed. In the first half of the year, the township enterprises accomplished a total industrial output value of 4,818.0 billion yuan, which was a 9.2 percent increase over the previous corresponding period. Their output value of sales totaled 4,580.6 billion yuan, up by 9.2 percent over the same period of last year, and their rate of turnover of industrial products was 95.07 percent, which was 0.4 percentage points higher than that in the corresponding previous period. Their accumulated industrial sales revenue totaled 4,231.3 billion yuan and the industrial profit totaled 229.7 billion yuan. Sales profit rate was 5.43 percent, which was 0.1 percentage points higher over a year before. This is an indication that the economic efficiency of the rural industries improved slightly.

3. The enterprises of considerable scales posted an excellent development momentum, and played a visible leading role. In the first half of the year, their annual sales revenue totaled 5 million yuan; the industrial enterprises realized an accumulated added value of 380 billion yuan, or a growth of 12.8 percent over the same period of last year. Sales revenue totaled 1,405.9 billion yuan, up by 12.7 percent. The value of export delivery totaled 335 billion yuan, up by 13.2 percent. Profit totaled 69.4 billion yuan, up by 9.7 percent. Tax payment totaled 44.3 billion yuan, rising up by 10.1 percent. The total industrial output value was 1,570.8 billion yuan and the total sales value was 1,499.0 billion yuan. As a result, the rate of turnover of products was 95.44 percent, or 0.37 percentage points higher than the average level of all township enterprises. The added value realized by the industrial enterprises of considerable scales rose from 35.3 percent to 36.2 percent against that of all rural enterprises, which was 0.9 percentage points higher than that of a year before. The proportion of the value of the export delivery by the industrial enterprises of considerable scales in the total export delivery by all township enterprises increased from 60.1 percent in 2001 to 69.9 percent. The growth was 9.8 percentage points.

4. Export delivery grew rapidly. In the first five months of the year, the export range of the township enterprises wandered around 10 percent. In June, however, the growth rate was higher. Exports in the first six months showed 11.3 percent increase over a year earlier and 3 percentage points higher than the monthly average level of growth in the second half of last year.

The following main factors contributed to the healthy and steady development of the township enterprises in the first half of 2002. First, fixed asset investment increased vigorously and technical transformation developed fast. The incomplete statistics of 23 provinces and municipalities indicated that the fixed asset investment by the rural enterprises in the first half of this year was nearly 150 billion yuan, up by 9 percent over the same period of last year. More than 40 percent of such investment was designed for technical transformation. Second, the investment environment improved further. The contractual value of investments by foreign businessmen and those from Hong Kong, Macao and Taiwan in Jiangsu, Shandong, Zhejiang, Beijing, Guangdong, Chongqing and other provinces and municipalities rose by about 20 percent compared with that of the same period of last year. Third, structural adjustment was intensified and the momentum for the development of the farm product processing industry was excellent. Fourth, industrial parks for township enterprises sprang up and became a new spotlight. At present, there are nearly 10,000 such parks, and the enterprises that have entered these parks are noted for better quality and higher technological level.

(4) Rural finance

By the end of June, the deposit balance of the rural credit cooperatives nationwide increased by 138.7 billion yuan as compared with the beginning of the year. This amount was also 39.5 billion yuan or 8 percent higher over the same period of last year. The loan balance also rose by 160.8 billion yuan as compared with the beginning of the year. This amount was 44.8 billion yuan more than that in the same period of last year, up by 13.4 percent or 2.4 percentage points higher. The increased amount of loans accounted for 19.4 percent of the total increased amount of all financial institutions, or 6 percentage points higher than the average level of their increased loans.

Of all the increased loans granted by the rural credit cooperatives in the first half of the year, the increase in loans to agriculture was obvious. Of all the loan balance of the rural credit cooperatives nationwide at the end of June, the balance of the loans to agriculture reached 551.1 billion yuan, which was 110.3 billion yuan more than that at the beginning of the year. Compared with the same period of last year, the increase was 38.7 billion yuan, up by 25 percent or 5.2 percentage points higher. It was also 11.6 percentage points higher than the increased volume granted during the same period. The increased loans to agriculture accounted for 68.6 percent of all the increased loans, which was 6.9 percent higher than that in the same period of last year. Beginning from April 2002, the balance of loans to agriculture exceeded for the first time the balance of the loans granted to the industrial and commercial institutions in the rural areas, and became the largest item of all the loans of the rural credit cooperatives. At the end of June, loans to agriculture accounted for 40.5 percent of all the loans.

The increase in loans to agriculture was mainly demonstrated in the increase of loans to peasant households. By the end of June, the balance of the loans granted to peasant households by the rural credit cooperatives nationwide totaled 417.6 billion) man, which was 102.8 billion yuan increase or 32.7 percent higher than that at the beginning of the year. The loans to peasant households accounted for 75.8 percent of all loans granted to agriculture, which was 4.4 percentage points higher than that at the beginning of the year. The increased amount of loans to peasant households accounted for 93.2 percent of all the increased loans granted to agriculture. Of the loans to peasant households, small amount of credit loans totaled 69.5 billion yuan, which was 36.8 billion yuan increase or 112.5 percent higher than that at the beginning of the year. The loans with joint guarantees totaled 26.8 billion yuan, which was 14.9 billion yuan increase or 125.2 percent higher than that at the beginning of the year. At the end of June, 90 percent of the rural credit cooperatives nationwide opened the business of small credit loans to peasant households, and 49 percent of them opened loans with joint guarantees. The coverage of the loans to peasant households (the proportion of the peasant households receiving small credit loans and joint-guaranteed loans in all the peasant households applying for loan) reached 46 percent.

II. Farm Product Market and International Trade

(1) The purchase and wholesale market of bulk farm products

Grain prices were stable with a slight pick up, while domestic cotton prices remained stable. In the first half of the year, the market price of domestic wheat was sluggish due to the effects of the sales of the state grain reserves at reduced prices and inventory displacement. In June, the market price of domestic wheat stopped declining and waited for a pick up. The prices of early rice continued to be stable while those of the quality late rice saw a seasonal rebound. At present, China's maize market has gradually bottomed out and the market prices began rising in late May 2002. But the range of price rise was not so high. With the arrival of imported soybeans, the prices of domestic soybeans remained basically stable.

Wheat: In June, the actual average purchasing prices of the red, white and mixed wheat offered by the state-owned grain enterprises in the main producing regions were respectively 48.7 yuan, 54.2 yuan and 52.9 yuan per 50 kilograms. Compared with the preceding month, the prices fell respectively by 2.3 percent, 0.7 percent and 1.4 percent. The selling prices of the three kinds of wheat offered by the state-owned grain enterprises were respectively 48 yuan, 53 yuan and 51.6 yuan per 50 kilograms. Compared with the preceding month, these prices were respectively 5.7 percent, 1.6 percent and 3.1 percent lower.

Rice: In June, the actual average purchasing prices of the early and late long-grained non-glutinous rice and the round-grained non-glutinous rice offered by the state-owned grain enterprises in the main producing regions were respectively 47.5 yuan, 53.05 yuan and 59.37 yuan per 50 kilograms. Compared with the previous month, the prices of the early long-grained non-glutinous rice and the round-grained non-glutinous rice fell respectively by 0.8 percent and 2.1 percent. The price of the late long-grained non-glutinous rice remained unchanged.

Corn: At present, China's corn market has gradually bottomed out, with the market prices beginning picking up in later May 2002. In June, the actual average purchasing price of com offered by the state-owned grain purchasing enterprises in the main producing regions was 47.92 yuan per 50 kilograms, while the selling price offered by the state-owned grain enterprises was 49.51 yuan per 50 kilograms. These prices were respectively 4.6 percent and 1.9 percent higher than those in the preceding month. The wholesale price of grade-2 corn at the Zhengzhou Grain Wholesale Market was 1,058.75 yuan per ton, up by 1.6 percent over the previous month. The wholesale price of grade-2 corn at the Tianjin Grain and Oilseeds Wholesale Market was 1,170 yuan per ton, up by 1.3 percent over the previous month.

Soybean: In June, the actual average purchasing price of soybeans offered by the state-owned grain purchasing enterprises in the main producing regions was 87.00 yuan per 50 kilograms, up by 0.8 percent over the previous month. The wholesale price of grade-3 soybeans at the Zhengzhou Grain Wholesale Market was 2,092 yuan per ton, up by 2.7 percent over the previous month. The wholesale price of grade-3 soybeans at the Tianjin Grain and Oilseed Wholesale Market was 2,175 yuan per ton, up by 0.7 percent over the previous month. The wholesale price of grade-2 soybeans at the Fuzhou Grain Wholesale Market was 2,440 yuan, down by 0.2 percent over the previous month.

(2) Open fair market of farm products

Since the beginning of 2002, the supply at the open fair markets of farm products has been abundant and the consumption demand has continued to be flat. As a result, the prices of farm products at the open fair market continued to fall. In the first half of the year, the nationwide average prices of 65 percent of the 68 main farm and sideline products were lower than those in the same period of last year, while those of 35 percent of these products went up slightly. In particular, the prices of grain, oilseeds, pork, piglets and vegetables at the open fair markets were visibly lower than those in the same period of last year. The market prices of beef, mutton, poultry and eggs were higher than those in the same period of last year.

Grain: The national average prices of the early and later long-grained non-glutinous rice and the round-grained non-glutinous rice were respectively 0.98 yuan, 1.06 yuan and 1.19 yuan per 500 grams. Compared with the prices of 1,00 yuan, 1.11 yuan and 1.14 yuan in the same period of last year, the prices were respectively 1.8 percent and 4.5 percent lower and 4.4 percent higher.

The national average prices of special-1 and standard wheat flour were respectively 1.23 yuan and 1.01 yuan per 500 grams, which were respectively 1.6 percent and 0.8 percent lower than those in the same period of last year.

Edible oil: The national average prices of the main varieties were respectively 2.86 yuan, 3.36 yuan, 4.72 yuan and 3.23 yuan per 500 grams, which were respectively 6.9 percent, 5.5 percent, 6.8 percent and 5.8 percent lower than those in the same period of last year.

Pork: The nationwide average prices of fresh pork were 6.90 yuan and 5.58 yuan per 500 grams, down by 3.9 percent and 3.1 percent respectively over the same period of 2001.

Piglet: Sales on the piglet market were rather flat. Except for the Spring Festival when the price was slightly higher, the price of piglets remained flat most of the time and even declined occasionally. The nationwide average price of piglets during the first half of the year was 4.28 yuan per 500 grams, down by 1.4 percent over a year before.

Beef and mutton: The nationwide average prices of the main varieties were 7.53 yuan, 8.9 yuan and 8.08 yuan per 500 grams, up by 4.9 percent, 0.3 percent and 3.4 percent respectively over a year before.

Egg: The nationwide average price of eggs was 2.54 yuan per 500 grams, up by 7.1 percent over that of the same period of last year.

Vegetables: Compared with the same period of last year, the average prices of most vegetables on the market across the country posted a drastic fall during the first half of this year. Of the 27 varieties of vegetables whose prices were monitored by the Price Center of the State Development Planning Commission, the prices of 23 varieties declined, mostly by more than 10 percent.

(3) Import and export of farm products

From January to June in 2002, the import and export of China's farm products totaled 10.93 billion U.S. dollars, up by 1 percent over those of the same period of last year, of which, export was 6.67 billion dollars, up by 6 percent over a year earlier. Import was 4.25 billion dollars, down by 6 percent over a year earlier. The trade surplus of farm products was 2.42 billion dollars, up by 36 percent over that of the same period of last year.

1. Grains (excluding soybeans) showed an increase in both import and export, resulting in a trade surplus

During the January-June period of 2002, China exported a total of 4.796 million tons of grains, up by 10.9 percent over the same period a year earlier. The country imported 1.591 million tons of grains, up by 4.4 percent. The net grain export was 3.205 million tons, up by 14.5 percent. The grain import and export also underwent big changes in the structure of varieties. Both rice import and rice export declined; com export increased and import declined; wheat had a rapid growth in both import and export.

Rice export was 659,000 tons and import was 103,000 tons, down by 27.5 percent and 14.6 percent respectively over that of the same period of last year. The net export was 557,000 tons, declining by 26.5 percent.

Corn export was 3.486 million tons, up by 11 percent, and import was 7,000 tons, down by 55.1 percent, compared with a year earlier. The net export was 3.479 million tons, up by 11.4 percent.

Wheat export totaled 556,000 tons, a growth of 200 percent, and import totaled 453,000 tons, a growth of 140 percent over the same period of last year. The trade trend turned from last year's net import to this year's net export.

2. Oilseeds showed a drastic decline in import and an increase in export. On the contrary, edible oil displayed an opposite trend.

Oilseeds: Affected by the gene-modification safety administration, China's import of soybeans and rapeseeds dropped and its export of soybeans reported a rapid growth during the first half of this year. Oilseeds export totaled 606,000 tons, up by 15.8 percent, and import 3.734 million tons, down by 49.8 percent, compared with the same period of last year. While soybean import was 3.258 million tons, down by 45.5 percent, its export reached 180,000 tons, up by 51.4 percent. Rapeseed import was 471,000 tons, down by 61.8 percent.

Edible oil: A total of 960,000 tons were imported during the first six months of this year, up by 12.2 percent over a year before. Export declined by 13.6 percent to 58,000 tons.

3. Cotton saw a rising export and a declining import. Sugar reported an increase in both import and export. The export growth of vegetables and fruit outpaced their import growth.

Cotton import was 42,000 tons, down by 35 percent over a year before; export was 56,000 tons, up by 22 percent. Sugar import totaled 560,000 tons, up by 33 percent, and export was 232,000 tons, up by 420 percent, compared with the same period of last year. Vegetable import was 49,000 tons, up by 5.6 percent, and export 2.032 million tons, up by 12.2 percent. Fruit import was 521,000 tons, up by 16.5 percent, and export was 863,000 tons, up by 32.9 percent.

4. Livestock products reported a decline in export and a growth in import, while aquatic products showed a growth in both import and export.

Affected by a complete ban by the European Union on the import of China's animal-sourced food items, the export of livestock products in the first half of this year was 1.33 billion US dollars, down by 8.5 percent, import was 960 million US dollars, up by 4 percent, compared with a year earlier. The export of aquatic products rose by 6.4 percent to 2.02 billion US dollars while their import went up by 37 percent to 1.06 billion US dollars.

5. China's export to Europe declined drastically while its export to other continents increased. Import from North America and South America declined while import from other continents went up.

As the European Union banned the import of China's animal-sourced products from January 31, 2002, China's export to that region reported a drastic fall. In the first six months, export to Europe totaled 700 million US dollars, down by 25 percent over a year earlier. The Chinas export to Europe was 1.03 billion US dollars, down by 12 percent. In addition, export to Africa declined by 19.3 percent. However, export to Asia and North America showed marked increases, respectively up by 8.8 percent and 27 percent.

III. The Environment for the Performance of the Rural Economy in the First Half of This Year

Overall, the environment for the performance of the rural economy is basically tight and occasionally liberal. But as the relevant government departments introduced a series of policy measures to support the restructuring of the rural economy, alleviate the peasants' burdens, promote the circulation and in-depth processing of farm products and boost the peasants' income, the policy environment has improved relatively. These policy measures covered the following 10 areas:

(1) In view of the situation after WTO accession, the relevant departments formulated the provisions and regulations on the tariff quotas for farm products and the import of genetically modified farm products. The move has effectively protected the trade of domestic farm products. In the first half of this year, the import of grain products declined markedly compared with that of the past. The estimate by the United States indicated that the move could reduce its export of farm products to China by about 1 billion US dollars.

(2) Inspections have been intensified on agriculture-related prices and charges. The relevant departments focused their inspections on four major areas: the establishment of the system of publicizing agriculture-related prices and charges; rural electricity charges and rural power-grid upgrading charges; rural housing construction charges; and the educational charges of rural primary and middle schools. In the meantime, a number of random fee-collecting cases were investigated. The authorities in charge estimated that the upgrading of the rural power-grid nationwide is close to completion. In most regions where the upgrading has been completed, the power price has dropped by 0.1-0.3 yuan per KWH, which could ease the peasants' burden by more than 30 billion yuan a year.

(3) The scope of returning farmland to forest continued to expand. By the end of last year, a total of 18.67 million mu of such land has been returned nationwide. In addition, forestation covered another 16.35 million mu of arid land and hillsides that were suitable for such purpose. The total amount was 35.02 million mu. In 2002, the state plans to return another 34 million mu of farmland to forest and afforest another 39.93 million mu of arid land and hillsides. This will _not only help further improve the ecological environment, but also help adjust the structure of agricultural production, reduce the grain stock and pull up the grain prices.

(4) Accelerate the reform of the grain circulation system. In addition to the opening of the purchasing and selling markets in the eight leading grain-selling regions, some grain producing regions also quickened their pace of reform. Jiangsu, Gansu, Guangdong, Hubei and some other provinces have liberalized the purchasing and selling prices of some varieties and actively promoted the reform of the state-owned grain enterprises. This has created favorable conditions for the peasants to find market demand, adjust production structure and increase income.

(5) The transport costs of bulk farm products have been reduced. The state has decided that from April 1, 2002 to the end of 2005, the railway construction fund shall be completely exempted for the railway transport of bulk farm products.

(6) The supervision on alleviating the burdens of township enterprises has been strengthened. Seven ministries, commissions, offices and agencies under the State Council jointly issued the Measures on the Supervision and Management on the Alleviation of the Burdens of Township Enterprises. The document demands that the administrative charges and their standards for township enterprises be examined and approved by the State Development Planning Commission, the Ministry of Finance or the provincial governments. The important documents must be examined and approved by the State Council. The charges and their standards examined and approved by the provincial governments must receive prior approval from the Ministry of Finance and the State Development Planning Commission. This document also contains explicit stipulations banning the increase of the burdens of township enterprises and requests the governments at all levels to set up a joint inter-departmental conference to coordinate the work of alleviating the burdens of township enterprises.

(7) Regulate rural finance. At the beginning of this year, the People's Bank of China formulated an eight-point document to strengthen the supervision and management on the rural credit cooperatives. The main contents are: the rural credit cooperatives must respect the peasants' wishes in issuing household loans, and are prohibited from using materials as loans, designating the shopping units, or making arbitrary account transfers; they are not allowed to deduct the share capital of the credit cooperatives, loan interest guarantee fund and all kinds of taxes and charges when releasing loans; they are strictly prohibited from issuing loans with hypothecation of personal stocks to prevent the agriculture-supporting funds of the rural credit cooperatives from flowing into the stock market; they are not allowed to issue loans to town and township governments and the village councils, the loans of the credit cooperatives should not be utilized to issue wages and various charges, issue the unified loans in the name of villages and teams, or pay various rural taxes and charges.

(8) Support the in-depth processing of farm and sideline products. In the first half of this year, the state launched a special project for the in-depth processing of farm and sideline products. In the first six months, a total of 18 grain and oil processing projects have been approved, covering soybean, rice, wheat, com, special oil and potato. They will increase the processing capacity by 2.09 million tons.

(9) The agricultural departments do practical things for the peasants. The Ministry of Agriculture announced that a total of 13 practical matters will be done within 2002 to increase the income of the peasants. They include the promotion of the technology for the production of high-quality soybean oil, the provision of improved fruit and tea seedlings, the organization of the fight against fake production cases, the intensification of livestock quarantine, the organization of technical support for the peasants, the implementation of the ecological homeland and prosperity plan, and the acceleration of the construction of the county and township information service networks.

(10) Accelerate the reform of rural taxes and charges. In addition to the 16 provinces approved by the central government for the experiment on the reform of rural taxes and charges, reform experiment has also been carried out in other provinces where conditions permitted. This has helped reduce the burdens of the peasants to some extent.

IV. Outlook for the Whole Year

(1) Agricultural production

1. The grain-growing acreage will remain stable and the output will pick up slightly.

It is expected that the grain-growing area in 2002 will be about 106 million hectares (1.595 billion mu), up by 0.3 percent over that of the last year. The growing area of cereals will expand by 0.7 percent, of which wheat-growing area will remain unchanged, rice-growing area will increase by 0.1 percent, com-growing area will expand by 1.9 percent and the growing area of other cereals will rise by 1.7 percent. In addition, the growing area of tuber crops will increase by 2.0 percent, while that of soybeans will expand by 3.3 percent.

The stabilization of grain-growing acreage is mainly due to the price rise on the grain market in 2001. An investigation into the prices of the fair markets in 100 counties across the country indicated that with the exception of soybeans, the prices of all the other unprocessed food grains were on the rise. In particular, the year-end prices of long-grained non-glutinous rice, quality long-grained non-glutinous rice, round-grained non-glutinous rice, wheat and corn were respectively 6.9 percent, 6.7 percent, 0.8 percent, 6.6 percent and 6.2 percent higher than that of a year before. Higher grain prices slightly improved the economic returns of grain growing and boosted the peasants' confidence in grain growing. It is expected that total grain output in 2002 will be 456-472 million tons, about 1 percent higher than that of last year. Soybean output will total more than 10.66 million tons.

2. Both cotton-growing area and output will drop drastically.

The cotton-growing area in 2002 is expected to be about 3.98 million hectares, down by 17 percent. Area reduction is reported in all the eight provinces and autonomous regions whose cotton output exceed 100,000 tons. Specifically, the area will be reduced by 21.8 percent in Xinjia.