The central government plans to offer 5.5 billion yuan (US$662 million) in cash rewards to some 800 major grain-producing counties across the country this year as part of its effort to ensure food security, boost rural economy and increase grain growers' income, Vice Minister of Finance Zhu Zhigang said on Thursday.

"The total grain output of these counties makes up 60 percent of China's total and at least 80 percent of all the commodity grain on the Chinese market," Zhu said at a press conference on the sidelines of the ongoing third annual session of the 10th National People's Congress.

But many of these counties are in fairly serious financial difficulty, as a result of single product mix and relatively low economic returns, he said. "The cash reward will hopefully boost grain growers' initiative and increase the fairness of China's finance policies."

He said the reward will be granted in proportion to the counties' grain acreage and output and can be spent on agricultural development, technological innovation, education, culture, health work and any other fields to improve rural economy and further raise the quality of the farmers' life.

"But in no circumstances should the money be spent on vanity projects, such as office mansions for local governments," said Zhu. "Any county that misuses the fund will be erased from the list of awardees."

In the past, grain-producing counties found themselves in a dilemma despite their contributions to the country's food supplies.

China moved to step up grain production last year when its grain output had kept declining for five consecutive years from 1999 to 2003, which aroused concern over food security and drastic hikes in grain prices.

To spur grain production, the government in 2004 provided 11.6 billion yuan (1.4 billion US dollars) of direct subsidies to grain growers nationwide, 2.8 billion yuan (337 million US dollars) in subsidies for improved seed strains in 13 major grain-growing provinces and 37.6 billion yuan (4.5 billion US dollars) of treasury bond proceeds to agriculture, according to Finance Minister Jin Renqing.

In 2004, China's grain production hit 469.5 million tons, 38.8 million tons or 9 percent more than the previous year, the biggest ever annual growth rate.

Minister of Finance Jin Renqing promised in late December that his ministry, instead of cutting the spending on agriculture for 2005, would go on improving policies on agricultural subsidies while giving more substantial support to increase agricultural production capacity.

(Xinhua News Agency March 10, 2005)