The State-owned grain trading firms, which dominate the grain market, are asked to transform their business mechanism, improve their market competitiveness, and continue to play the leading role as the main distribution channel of grain and take the lead in following the government's grain policies, according to the regulation.

The regulation stipulates that grain prices should be decided by the market, and grain dealers should follow the guidelines of free will, fair trading and honesty, and should not harm the legitimate rights and interests of grain growers and consumers and the national, social and public interests in trading activities.

Premier Wen Jiabao signed a decree on May 26 to make public the regulation, which comprises 54 articles with six chapters.

According to the decree, two 1998 regulations issued by the State Council on grain purchase and penalizing illegal grain deals will be abrogated as the new regulation goes into effect.

Addressing a two-day national meeting that ended here Tuesday, the premier listed liberalization of grain trading and pricing and offering subsidies to grain growers as among China's priority tasks for reforming its grain distributing system.

It is high time for China to liberalize grain trading in major grain-producing areas, and efforts should be made to improve the grain pricing mechanism and set up a unified, national, open, and competitive grain market, Wen noted.

As of this year, added the premier, China would introduce a system across the country to offer subsidies directly to grain growers in leading grain-producing areas so as to encourage them to grow more grain.

The reform would give scope to a positive role in encouraging grain production, raising farmers' income, stabilizing the grain market, and ensuring national food security.

(Xinhua News Agency June 4, 2004)