China will continue reforming its agricultural sector, including a further widening of its program to abolish rural taxes, a senior bureaucrat said Monday, according to a Dow Jones report.

Despite the government's continued efforts to boost the farm sector, Chen Xiwen, deputy director of the Office of the Central Financial Work Leading Group, said he didn't expect China to return to being a net trade exporter in 2004. "We will continue to suffer a trade deficit," he told a news conference, without providing a specific forecast. But he quickly added that there "won't be any shortage of food."

In 2004, China became a net importer of agricultural products for the first time in seven years, as growing demand for food pushed up grain imports to 8 million tons.

Chen was speaking at a news conference to outline the government's strategy for boosting the agricultural sector, a prime area for reform in a country where a majority of the people still rely heavily on farms for their livelihood.

China's grain output rose 9 percent year on year to 469.5 million metric tons in 2004, the first annual increase after five years of declining harvests. Rising grain prices were also cited as a major reason for the increase in China's consumer price index to its highest yearly level in eight years.

To further support rural development, the ruling Communist party at the weekend issued an update of its Document No. 1, a white paper that outlines its goals for reforming the agricultural sector.

Outlining those goals, Chen said the government intends to push forward plans to broaden its rural tax reforms this year by adding 16 tax-exempt provinces to the eight declared in 2004.

In 2004, the central government transferred CNY52.4 billion to local governments to make up for foregone revenue due to the abolition of rural taxes, Chen said.

Abolishing fees and taxes often arbitrarily imposed by local authorities is a cornerstone measure adopted by the ruling Communists as they work to raise farm incomes and maintain popular support for the government.

As well as reducing the tax burden on farmers, the government also plans to invest in rural infrastructure and environmental projects.

The central government invested about CNY70 billion, or about a third of the central budget, on agricultural projects in 2004.

Chen said in 2005, the government will intensify conservation of arable land and step up the construction of irrigation and water conservation facilities. The government will also train farmers to better conserve water and how to build infrastructure in local areas in an attempt to narrow the gap between rural and urban development, he said.