The development of biofuels will be strictly controlled to protect the country's grain supplies and arable land banks, Agriculture Minister Sun Zhengcai said on Wednesday.
With a population of 1.3 billion, "China will never develop biofuels at the cost of grain supplies or arable land," he said.
The production of fuels from corn and oil crops will be strictly controlled, he said.
China is the world's third-largest producer of ethanol, with four companies making the fuel, mostly from corn.
With the price of crude oil continuing to soar, the development of bio-energies is gathering momentum around the world.
According to newspaper reports 12 percent of the world's corn and 20 percent of its rapeseed are used to make biofuels. Experts have said this demand is to blame for the soaring prices of grain and edible oils on world markets.
In the first quarter of this year, the global price of corn was up 110 percent on late 2006. And while China imposes strict quotas on corn imports and exports, the domestic price has risen 30 percent since last year, to about 1,700 yuan ($240) per ton.
According to Sun, more emphasis should be put on the development of biofuels from agricultural waste, such as wheat straw, corn stalks, animal feces and non-grain farm produce.
Every year, China produces about 700 million tons of agricultural straw and 3 billion tons of animal waste. It also has about 100 million hectares of land, which is unsuitable for growing grain but could be used to cultivate plants for fuel production, Sun said.
The government has said that by 2010 it will develop a number of new crop bases, mostly to grow sugarcane, sweet sorghum, cassava and rapeseed for fuel production.
Also, four non-grain-based ethanol plants are under construction in the Inner Mongolia and Guangxi Zhuang autonomous regions and Hebei and Shandong provinces, which are prime areas for growing cassava and other biomaterials.
Experts have said that with the greater use of alternative source materials, by next year, the proportion of corn used in the production of ethanol should fall from 90 percent to 70 percent.
In another development, the Ministry of Agriculture yesterday urged rice-growing provinces in south and southwest China to be on the alert for two pests - the rice plant hopper and the rice leaf roller - infestations of which have been reported in several provinces since last month.
"The damage done this year by the insects to paddy fields in southern and southwestern regions of the country has been much greater than it was in the same period last year," the ministry said on its website.
The plant hopper, which sucks the sap from plants, is the more damaging of the pests.
The China Meteorological Administration said the early arrival of summer winds and rainfall has created favorable conditions for the pest.
Last year, plant hoppers infested 1.2 million hectares of paddy fields in south China, as a result of heavier than usual rainfall.
Xinhua contributed to the story