The cabinet, urged governments at all levels to put into effect all subsidy and stimulus policies regarding pig and cow breeding.

Zhang Xiaoshan, director of the rural development research institute of the Chinese Academy of Social Sciences, said the central government's announcement of the fresh investment will help stabilize pork prices, amid fears of the A(H1N1) flu.

Earlier this month, pork prices in three of the biggest markets in south China's Guangzhou dropped significantly.

Statistics released by the National Development and Reform Commission (NDRC) last week showed pork prices in major Chinese cities averaged 10.13 yuan ($1.5) per kg at the end of April, down 10.4 per cent from the same period last year.

"Since the pork available in domestic markets mostly comes from large-scale breeding farms, its price would automatically stabilize once the government implements the subsidy and stimulus policies," Zhang said.

The central government promised to double the subsidy to 100 yuan for every fertile sow since July 2008.

The State Council further said it plans to build a grain reserve capacity of 15 million tons, oil reserve of 1.75 million tons, sugar reserve of 400,000 tons, and cotton reserve of 500,000 tons within two years.

Airfares will 'drop further'

As the first case of A(H1N1) flu was confirmed on the Chinese mainland yesterday, tourism experts predicted that domestic and international airfares could see a further drop.

Many airlines have already slashed their international fares by as much as 30 percent owing to the global financial recession and then the outbreak of the flu in Mexico.

A return Air China flight to Dubai from Beijing now costs as low as 2,900 yuan, 1,400 yuan cheaper than what it was a few months ago. Flying from Beijing to Sydney and back, which is usually priced above 6,000 yuan, now costs just 4,600 yuan, an Air China official said.

Seats on some international flights leaving Shanghai are now being sold at the lowest points in three years, the Shanghai-based Jiefang Daily reported.

Soon after the three-day 1 May holidays concluded, domestic rates were also slashed, with some seeing as much as an 80-per cent cut.

The cheapest ticket from Chongqing to Sanya in Hainan province costs only 260 yuan, 80 per cent off the full price.

And with the first case of flu being confirmed on the mainland, even discounted airfares may not lure passengers, Luo Zhuping, the board secretary of China Eastern Airlines, said.

"The epidemic will affect people's traveling mentality. Domestic as well as international flights are bound to be affected."

Tang Kejia, a resident of Beijing, said she will try to avoid traveling as much as possible now "as the chances of getting affected are maximum at the airports".