China will freeze approvals for industrial corn processing for three years and suspend approved projects which have not yet started construction, the National Development and Reform Commission (NDRC) said.
The ban on so-called 'deep processing' of corn - involving the transformation of corn into industrial products like ethanol - comes amid concerns in China about the security of the food supply and the inflationary impact of biofuels which use grains as feedstock.
The commission said in a notice on its website that it will not 'in principle' approve new corn deep-processing projects until 2010.
The NDRC will also closely review the expansion plans of existing deep-processing projects which use corn.
During the early stages of the new policy, foreign companies will also be forbidden to invest in bio-ethanol production projects, and not allowed to acquire or invest in domestic bio-ethanol producers.
The NDRC said the development of deep-processing industries was excessively rapid in some areas, and the growth of production capacity has exceeded that of corn output.
In the 10th Five-year between 2001-2005, annual growth of corn consumption by the sector was 14 pct, against an annual growth of 4.2 pct in corn output.
Over the next three years, corn consumption by the deep-processing sector will be restricted to 26 pct of China's total corn consumption, the NDRC said.
China corn output in 2010 is expected to hit 150 mln tons, up 3.5 pct from the level in 2006, while market demand will be over 150 mln tons, up 14.3 pct from 2006.
The NDRC said that it will adjust corn export and import policies, with an export rebate adjustment on corn products to be studied.
The commission also proposed a reduction in corn exports and urged the import of more corn to ensure supply.