China has declared an emergency over a drought which could devastate crops and farmers’ incomes, official media said, threatening further hardship amid slumping economic growth. The drought gripping parts of central and northern China has sent Zhengzhou wheat futures prices up 5 percent this week but physical prices have not moved, with most investors confident the country’s reserves and last year’s big harvest can offset any fall in wheat production this spring. The drought could hurt the incomes of farmers in Henan, Anhui and other populous provinces when many have lost factory and construction jobs after China’s growth faltered in late 2008.
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