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Quake 'will not affect nation's growth'

By Zhu Zhe (China Daily)
Updated: 2008-05-29 13:24

 
Farmers plant paddy in Mianzhu, one of the quake-hit areas in Sichuan province. The government has decided to dispatch 384,000 tons of grain from its reserves to the region to ensure stable food prices. [Xinhua]

The massive earthquake in Sichuan province will have a serious impact on local economy but barely weigh on national growth or the overall consumer price index (CPI), senior officials said Wednesday.

"The quake will be a heavy blow to the local economy as many assets and production facilities were destroyed," Mu Hong, vice-minister of the National Development and Reform Commission (NDRC), told a press conference organized by the State Council Information Office.

"But it will have a very limited impact on the country's economic fundamentals."

Mu said the economy in Sichuan accounts for only 4 percent of the nation's GDP; and the economy in northern Sichuan, the hardest-hit region, less than 1 percent.

He also said the disaster will not have a significant impact on the country's food supply due to sufficient grain reserves and the expected good summer harvest.

"Therefore, at present, we consider it unnecessary to change the current fiscal and monetary policies," Mu said.

The government plans to release the first batch of 384,000 tons of grain from its reserves to help maintain supplies and price stability in affected areas, according to the NDRC. By Tuesday, 38,000 tons of grain and 850 tons of edible oil had been transported.

National grain reserves are estimated to be 150 to 200 million tons.

Agriculture Minister Sun Zhengcai has said the unit production of the nation's summer grain harvest will hit a record high with the total output rising for a fifth consecutive year, according to a Xinhua report on Tuesday.

"The overall grain supply will not be affected as most of the quake-stricken areas are mountainous and not arable," Wan Fushi, an official with the crop production bureau of the Ministry of Agriculture, was quoted as saying.

"Given all the circumstances, the prices of grain and food, which make up a major part of the inflation basket, are expected to remain stable for the rest of the year, and the CPI is not likely to be affected greatly," another NDRC official, Shi Gang, told Wednesday's press conference.

Because the quake has disrupted operations at Sichuan mines and there are growing concerns over summer fuel shortages, Mu said the country does not encourage domestic companies to export large amounts of coal.

"Our priority is still the domestic market," Mu said.

He noted that high crude oil prices, which recently peaked above $135 a barrel, would likely act as a deterrent to oil imports. "We now rely on imports for about 47 percent of oil consumption, and it will be unwise to increase the proportion."

Mu also said the post-quake reconstruction will take at least three years.

He said the government is assessing geological conditions to find locations for reconstruction projects, and the next step is to formulate an overall reconstruction plan and detailed implementation rules.



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