China’s drought may have serious global impact

Wide swathes of northern China are suffering through their worst drought in 60 years — a dry spell that could have a serious economic impact worldwide if it continues much longer, experts say.

Some areas have gone 120 days without any significant rainfall, leaving more than five million hectares (12.4 million acres) of crops damaged — an area half the size of South Korea — China’s drought control agency said Sunday.

There are fears that the problem could send global prices soaring at a time when food costs are already causing governments headaches. According to the UN last month world prices broke their peak levels of 2008 to hit a record high.

“If the dry spell continues into March or April, wheat production could be seriously affected, with losses of more than 10 million tonnes,” Ma Wenfeng, an analyst at Beijing Orient Agribusiness Consultants, told AFP. “China would be forced to boost its imports.”

More than 2.5 million people lack drinking water, particularly in the eastern and central provinces of Shandong and Henan, which each have around 95 million inhabitants.

Shandong’s Rizhao city, which means “sunshine”, has suffered from its longest drought in 300 years, stretching back to September 11, according to local media.

Around the world, wheat exporters such as the United States, Russia or France are closely monitoring the weather forecast not only for China but also for India, which is experiencing an even worse drought, ac cording to Ma.

But with soaring food prices already weighing on people’s minds, the psychological impact of the drought — and its potential effect on prices — is quite big, said Ren Xianfang, a Beijing-based analyst with IHS Global Insight.The government has said it will hand out 2.2 billion yuan ($334 million) in immediate drought relief aid.

It will also invest four trillion yuan over the next decade to improve water stocks and distribution, amid warnings of worse to come.

“With the urbanization planned for the next five years, the shortage will become even more acute,” warned Ren.  Read full at physorg