The move follows an increase in general food prices due to grain being used as a raw material in biofuel processing.

An official paper was issued by the National Development and Reform Commission (NDRC), to cool down what it called "the overheated and blind" trend of development in ethanol processing.

China produced 1 million tons of ethanol last year. It ranked after Brazil and the United States, as one of the world's major producers.

More than 10 million tons has been produced or is being produced since the beginning of this year,

The demand for ethanol has led to a rise in grain prices which in turn has trigged price rises in other food items.

The NDRC pledged to rein in the development of the ethanol industry by centralizing the approval procedure for all new projects, grain-based or not.

One "fundamental principle" in China's biofuel development, the NDRC said, is to support its production based on non-food vegetation, rather than on such grain items as corn.

Items of non-food vegetation, as defined by the NDRC, are primarily cassava (a plant with starchy roots), sweet sorghum, and other plants with high fibre content.

The NDRC paper will remain the official guideline for the ethanol industry as the central government is still evaluating the nation's pilot projects, and the ethanol development strategy for China's 11th Five-Year Plan (2006-2010).

1

2

(For more biz stories, please visit Industry Updates)