The basic principle for solving the problem of grain supply and demand in China is to rely on the domestic resources and basically achieve self-sufficiency in grain. China endeavors to increase its grain production so that its self-sufficiency rate of grain under normal conditions will be above 95 percent and the net import rate five percent, or even less, of the total consumption quantity.

China has basically achieved self-sufficiency in grain at the present stage, and there are many favorable objective factors for her to maintain such achievement by her own efforts in the course of future development: Natural agricultural resources, production conditions, technical level and some other conditions ensure great potential in this respect.

-- There is potential for increasing the yield per unit area on the existing cultivated land. At present, the per unit area yield of grain varies widely in the same districts, the highest yield being 7,500 kg to 15,000 kg per hectare, and the lowest 3,000 kg to 5,000 kg. Given a relatively stable sown area, China can achieve its desired total grain output target if the annual average increase rate of per unit area yield is one percent from 1996 to 2010 and 0.7 percent from 2011 to 2030. Compared to the annual average increase rate of 3.1 percent of the per unit area yield in the past 46 years, it is clear that one percent and 0.7 percent are fairly low. So to achieve the target is totally possible even if the factor of diminishing land returns rate is considered. At present, China's per unit area yield of grain is low compared with the countries with high grain yields. It will be difficult for China to reach the level of countries with high grain production in a short period of time, but the gap can certainly be narrowed through earnest efforts. The grain output per hectare can be increased by more than 1,500 kg through the upgrading of medium- and low-yield land, beefing up water-control projects, enlarging irrigated areas and spreading the use of advanced agrotechnology. -- There is also potential for exploiting untouched arable

land resources. China now has 35 million ha of wasteland which is suitable for farming. Of this, about 14.7 million ha can be reclaimed. The Chinese government will make efforts to speed up the reclamation of wasteland suitable for farming as well as land discarded by factories and mines, while measures will be adopted to protect the existing cultivated land. In the next few decades China plans to reclaim more than 300,000 ha each year to make up for the loss of cultivated land appropriated for non-farming uses and to keep the area of cultivated land constant for a long period of time. The grain-sown area will be stabilized at about 110 million ha through the increase of the multiple crop index.

-- There is scope for scientific and technological improvement. At present, the contribution made by science and technology to agriculture accounts for about 35 percent of the agricultural production increase, while it exceeds 60 percent in the agriculturally advanced countries. The Chinese government has drawn up a strategy for agricultural development by relying on science, technology and education and is striving to put it into practice so as to narrow this gap: By 2000 the contribution rate of science and technology to agriculture will be increased to 50 percent, and by 2030 it will be close to that of the advanced countries. This will enable China to go a step further in grain production.

-- Non-grain food resources can be exploited also. China has rich water, grassland and sloping land resources which have great potential for exploitation. According to statistics, among the 17.47 million ha of inland waters, 6.75 million ha can be used for aquaculture. At present, only 69 percent of the water area is used. About 6.70 million ha of rice fields can be used for fish breeding, but the utilization rate at present is only 15 percent. And China has an offshore water area of 2.60 million ha suitable for aquaculture, but the utilization rate is only 28 percent. China will actively increase the productivity of its waters so as to keep a continuous rapid increase of aquatic products. China has a grassland area of 390 million ha, of which about 320 million ha can be used, which places China third in the world in the area of usable grassland. If the intensification level of livestock farming in grasslands is improved through the development of artificial grassland, animal by-products will increase greatly. Moreover, mountainous areas account for 70 percent of China's total territory, and this favorable condition for the development of arbor foodstuffs will offer China wide prospects for increasing the supply of such stuffs.

-- Grain losses can be curtailed. According to estimates by experts, the loss rate of grain is at least 10 percent in the course of planting, harvesting, transportation, storage, selling, processing and consumption -- a total of well over 45 million tons. So it will be possible to save at least 20 million tons of grain every year if such losses are reduced to within the rational limits.

The Chinese government has determined to even up the grain supply to meet the demand through increasing grain production, and is confident of its ability to lead the people throughout the country to achieve this goal. But at the same time it also knows clearly that this is not an easy task. First, the average amount of agricultural resources per capita in China is low compared with many other countries. China lacks cultivated land and water resources, and this is the dominant factor restricting its agricultural development. In these conditions China must make great efforts to advance its agricultural productivity and make it far higher than the average world level. Second, China's agricultural infrastructure is weak, means of production lag behind and it does not have sufficient ability to fight natural calamities. So a sustained effort should be made in these respects. Third, grain production will fluctuate in the course of the transformation of the economy into a socialist market one because of the small-scale production and decentralized management of peasant households. So adjustment and control of grain production should be strengthened.Fourth, because China is in a period of rapid industrial development there is a distribution tendency in resources that is unfavorable to grain production. So effective measures have to be adopted in support of agriculture, especially grain production. In a word, facing difficulties squarely, the Chinese government will continue to strictly carry out the basic policy of protecting cultivated land and ecological environment in its economic distribution and its work guidance and implement the two major strategies: developing agriculture by relying on science, technology and education in the countryside, and realizing sustainable development. Thus it expects to promote a fundamental change in the agricultural economic system and the method of increasing agricultural production, so as to facilitate the steady increase of the overall grain production capability.

While standing for the resolution of balance between the supply of and demand for grain at home, China will not refuse to use international resources as a necessary complement. This will, however, only play the role of regulation in varieties, in case of crop failures and to support poor regions. There are the following three reasons for China to even up its grain supply to meet the demand: First, grain production plays an important role in maintaining social stability. China is a country with a population of more than 1.2 billion, which makes it imperative for the government to ensure a high rate of grain self-sufficiency as a necessary condition for stability. Otherwise, it will not be able to maintain its national economy's sustained, rapid and healthy development. Second, stability of the grain market. The quantity of grain consumed in China every year is one fifth of the world's total. If China were to import a great deal of grain from other countries, the international grain market would be under severe pressure, and poorer countries would be unable to obtain enough supplies of cheap grain from it. Third, the employment of the rural work force. At present, China has more than 400 million laborers in the countryside, and the development of grain production is one of the main ways of stimulating the employment of the rural work force and increasing the income of the farmers. To import too much grain would have an unfavorable impact on grain production at home as well as on the employment of the rural work force. China's striving for relying mainly on her own efforts to solve the grain problem will serve only to improve the stability of the world grain market and strengthen the stabilizing factor of the international grain trade.

China has never relied on the international grain market too much. From the founding of New China to the eve of the 1960s China was a net exporter of grain. After that it began to import more than it exported. Since the reform and opening polices were introduced at the end of the 1970s the net import percentage in domestic grain production has been on the decrease. It was 3.2 percent from 1978 to 1984, 1.2 percent from 1985 to 1990 and 0.4 percent from 1991 to 1995. Therefore, the small quantity of grain imported by China will not imperil the stability of the international grain market. There is no basis to the international clamor about a ``China threat in food supply.'' It is true that China imports some grain, but at the same time it also exports some foodstuffs with fairly high added value. From 1985 to 1995 the export value of foodstuffs and edible animals and poultry was US$ 75.6 billion, while the import value was US$ 34 billion, so China was a net food-exporting country. China is willing to establish comparatively stable trade relations in grain with the grain-exporting countries on the basis of equality and mutual benefit.