Hemp plant. Photo:Xinhua

An industrial hemp deal worth 500 million yuan ($71.3 million) between a pharmaceutical company and a county government in Northeast China has boosted industrial hemp shares. Industry insiders say the market sees the potential for the industry in the region.

Shares in Jilin Zixin Pharmaceutical Industrial Corp increased 7 percent to 6.75 yuan during the day, nearly hitting the daily limit. 

The company will sign a contract for an industrial hemp project worth 500 million yuan with the county government of Gannan in Qiqihar, Northeast China's Heilongjiang Province, according to a notice from the Qiqihar city government on its website on Tuesday.

Jilin Zixin will conduct comprehensive cooperation with the local government and the Qiqihar Administration for Market Regulation in sectors including industrial hemp breeding, variety selection, industrial cultivation, processing and extraction, and upgrading of industrial models.

Market analysts said the contract showed the potential for investment in the industrial hemp industry in Heilongjiang Province, and also in the Northeast region.

Heilongjiang Province published a three-year plan for industrial hemp in March 2018, in a bid to accelerate the development of the hemp industry for industrial use. 

A cannabidiol extraction project worth 1 billion yuan was launched in Qiqihar earlier this year. 

The Changchun customs in Northeast China's Jilin Province signed a strategic cooperation agreement with Jilin Zixin company to carry out cooperation in the next five years on the testing of imported and exported industrial hemp seeds and seedlings, and the formulation of industrial hemp industry standards, as well as scientific research into industrial hemp and other fields.