Chinese seers view 1995 as worst of times

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In Jiangxi province, sales of red umbrellas have risen as fast as the flood waters in recent weeks, while in drier Shandong province, red vests and trousers are in fashion. Thus do the superstitious hope to fend off the great calamities which are predicted for a lunar leap year.

As everyone in China is well aware, 1995 includes a "double-eight month", which means there is an extra August. Any lunar leap year is bad enough - the last one, in 1976, saw the devastating Tangshan earthquake and the deaths of Chou En-lai and Chairman Mao. But to have two lunar Augusts is thought to be particularly bad.

China's weather is doing its best to fuel the worst forecasts. Drought has gripped large swathes of the arid north of the country, while the annual rains in the southern grain bowl have left the Yangtze at its highest levels since 1954. The soothsayers are warning that this year may see a mighty flood followed by the death of Deng Xiaoping.

Less apocalyptic, but of immense concern to the Chinese government, is the possibility that a weather-savaged autumn harvest will undermine the crucial battle against inflation. "Floods may pose a threat to the harvest of rice and finally to the government's anti-inflation efforts," Xia Jixian, of the state body which administers grain reserves, admitted this week.

The north and north-west are experiencing their worst drought for 60 years. In Gansu, nearly three-quarters of the farmland has ben rendered useless. In Sha'anxi province, 6.4 million people are short of drinking water in the capital, Xian.

The south is suffering the opposite problem. Each year at about this time, the Yangtze rises and wreaks destruction, despite the government's attempts at flood prevention, but this summer the heavy rains seem to have been augmented by snow melting on the Tibetan plateau. More than 1,200 people have died and millions have been stranded or displaced. An estimated 60,000 refugees were reportedly crowding into the city of Jiujiang in Jiangxi province.

It is too early to compare the likely outcome with 1994, when more than 5,000 died and nearly 20 million hectares of land were damaged by the end of the summer floods. If the Yangtze's waters were to rise significantly, a far greater tragedy could threaten; in 1954, about 3 million people died when the river breached its dikes.

The next few weeks are critical. But even if the flooding is no worse than last year's, the weather is already a severe blow to the government's priority task for this year - to reduce inflation. In 1994, Peking blamed 60 per cent of the 21.7 per cent rise in retail prices on higher food prices, which in turn were partly blamed on the weather.

The ambitious 1995 inflation target is 15 per cent and, if the official figures are to be believed, this no longer looks as unattainable as it did at the beginning of the year. Yesterday the government said inflation had slowed to 16 per cent in June, compared with 21.2 in January, but one Western economist said this was "very suspicious".

A disappointing autumn harvest and a shortage of grain could easily thwart the target. Even a perception that floods and drought is affecting output would be enough to encourage peasants to hoard grain in expectation of higher prices, just as they did last year. And in such a situation, regardless of any lunar leap year, rising prices become a self-fulfilling prophecy.