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China Drought to Test Policymakers on Inflation Management

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The current drought in southwest China that has threatened grain production in the region would not have a major impact on national food prices, experts said, but added that the risk of inflation may rise if the drought spreads further.

 
Boats are seen stranding on crackled bed of the Chirui Lake in Shiping County, southwest China's Yunnan Province, March 24, 2010. The sustaining severe drought ravaged this region since last October and made no harvest of crops. [Xinhua]

The lingering drought that began autumn last year has resulted in enormous economic losses and a decline in grain production in Yunnan, Guizhou, Sichuan provinces, Guangxi Zhuang Autonomous Region and Chongqing municipality, and has ignited market concerns of soaring food prices and inflation.

However, experts dismissed such worries, saying China had abundant food reserves and southwest China was not the country's major grain production area.

"National food prices are unlikely to soar as grain output in the regions is mainly for their own consumption and only accounted for 15 percent of the country's total," said Zheng Fengtian, deputy dean of the School of Agricultural Economics and Rural Development of Renmin University.

As of Tuesday, the drought had affected 96.54 million Mu (about 6.44 million hectares) of arable land in the five regions, said the State Flood Control and Drought Relief Headquarters. As of the end of 2008, China had about 1.83 billion Mu of arable land.

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