SHANGHAI, March 1: China increased its grain production 2.8 per cent to 497.46 million tons in 2006, but the world's most populous nation still faces the prospect of shortages, state press reported on Thursday.

Production last year was 13.46 million tons more than in 2005, as annual grain output in China increased for the third year running, but still short of the country's demand, the China Daily said.No break-up was given on the differing grains. China also includes legumes, such as beans, and oil bearing seeds, as part of its grain statistics.

China faces the possibility of a 48 million tons grain shortage in 2010, equal to nearly nine per cent of the country's grain consumption, according to a recent study published by the ruling Communist Party's central school.—AFP