China will spend 20 billion yuan ($2.93 billion) on rural water conservancy projects as one of the steps it is taking to stimulate domestic demand, the State Council, or the Cabinet, said on Tuesday.

The investment will be part of the fourth-quarter stimulus spending, which has been put at 100 billion yuan.

"The money will mainly go to projects that will reinforce risky water reservoirs, save water in major irrigation areas and improve drinking water safety in rural areas, as well as other projects," said Chen Lei, head of the Ministry of Water Resources.

According to the National Development and Reform Committee (NDRC), the nation's top planning body, provincial economic planners and water resource departments will work together to ensure all the governmental funds are allocated to specific projects covered in the plan within 10 days. All the projects must be completed by March.

Vice Premier Hui Liangyu provided further information on the country's blueprint of rural water conservancy development in the next decade.

"Our target is to enhance the safety of key reservoirs by 2010, provide qualified drinking water for all rural residents by 2013 and complete the construction of water-saving facilities for large-scale irrigation areas across the country by 2020," he said.

These projects will address prominent rural development problems. Statistics indicate that 53 percent of China's arable land lacks basic irrigation facilities, causing 50 billion kg of grain to be lost every year.

More than one third of the 85,000 reservoirs nationwide are rated as risky, while about one third of all counties and villages lack qualified water supply equipment.

According to Hui, the plan is also in line with China's first mid- and long-term grain security plan, released by the NDRC on November 13.

The plan targets grain production of at least 500 billion kg by 2010 and more than 540 billion kg by 2020. Output was 501.6 billion kg last year.

"To achieve the multi-billion kilogram increase in grain output, we will step up the improvement of rural farming infrastructure," he said.

Hui predicted grain output would increase for a fifth consecutive year in 2008 to exceed 512.3 billion kg, the peak harvest recorded in 1998.