China has vowed to keep grain output above 500-million tonnes in 2008 as the world's largest producer and consumer of rice struggles to cope with rising global grain prices, state media said on Thursday.

"We will strive to stabilise full year grain output at more than 500-million tonnes," said Agriculture Minister Sun Zhengcai, according to the China Securities Journal.

In 2007, China produced more than 501.5-million tonnes of grain, almost level with the nation's annual consumption of 510-million tonnes, official data showed.

Sun's remarks came at a time when global rice prices rose to their highest level in 19 years and wheat prices to a 28-year peak, stoking fears that they might affect domestic prices and exacerbate already high inflation.

China's inflation, mainly driven by surging food price, reached 8.0 percent in the first quarter of the year. In February, it climbed to 8.7 percent, the highest in nearly 12 years, before easing slightly to 8.3 percent in March.

"We must be highly alert to potential imported grain price rises and unusual changes in grain imports and exports," Sun said, according to the report.

The government scrapped tax rebates for grain exports late last year and levied taxes on grain exports in 2008 aimed at reining in galloping inflation and ensuring stable domestic food supplies.

Sun said the domestic agricultural products market was currently in balance due to output growth in recent years and large reserves, adding "rises of farm produce prices are ... reasonable and controllable".

The central government promised at the beginning of the year to spend 562.5-billion yuan ($80.3-billion) this year to support farmers, 130.7-billion yuan more than in 2007.

In March, it said it would earmark another 25.3-billion yuan to boost grain production in particular.

AFP