The central and local governments will act to prevent further falls in sugar prices, Guo Shengkun, Communist Party head of southwest Guangxi Autonomous Region, told reporters on Tuesday.

Guo, speaking at a press conference held by the State Council's Information Office, said some governments have started to build a sugar stockpile with the goal of keeping prices at 3,000 yuan (about 435 U.S. dollars) to 4,000 yuan per tonne.

On Tuesday, prices in Yunnan and Guangxi, China's major sugar-producing area, dropped below 3,000 yuan per tonne.

The government will also establish a mechanism to link sugar prices to those of sugar cane to avoid sharp price falls, Guo said.

Guo said the region's government would urge sugar producers to find more ways to use the crop, such as making grain alcohol, to reduce supply.

The government would also advise farmers to be cautious in expanding sugar cane planting and to pay close attention to market prices, he said.

Guangxi produced 9.71 million tonnes of sugar last year, or about two-thirds of China's total. There are 13 million farmers in Guangxi who make a living by planting sugar cane.

Guo admitted that falling sugar and non-ferrous metals prices had reduced farm incomes, government revenue and corporate profits.

However, he said, these declines would have a limited impact since the region had a diversified industrial base that included sugar, mining and vehicle and machinery production.

He attributed depressed conditions in Guangxi to the global financial crisis. But he said he remained optimistic on the region's economy since the central government's economic stimulus program would provide business opportunities.

"The central government's policy to increase domestic demand will help the region," Guo said. As an example, he said, the region's mini-van production had not been affected.

"For our machine-making industry, the central government plan to increase infrastructure construction revealed in the stimulus will also provide more sales for us," he said.

(Xinhua News Agency December 2, 2008)