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Assessing the distortionary impact of state trading in China

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  • Steve McCorriston
  • Donald MacLaren

Abstract

State trading is a common feature in the management of imports and exports of agricultural products and it has been a long‐standing feature of China's agricultural trade regime. While the use of state trading was modified by China's accession to the WTO, it remains a dominant feature for some commodities, even though there have been recent attempts to diminish its importance. In this article, we review the role that the state trading enterprise (STE), China National Cereals, Oils and Foodstuffs Import and Export Company (COFCO), continues to play in the importing and exporting of some agricultural commodities. We then review the economic theory that has been developed to measure the tariff equivalent of importing STEs. Finally, we apply that theory through a calibration exercise to measure the tariff equivalent of COFCO in China's import market for wheat. The distortionary impact of COFCO depends on the bias in government policy toward agriculture, the competitiveness of the domestic procurement market, and also the number of firms that are allocated licenses to import alongside COFCO.

Suggested Citation

  • Steve McCorriston & Donald MacLaren, 2010. "Assessing the distortionary impact of state trading in China," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3‐4), pages 329-335, May.
    • Handle: RePEc:bla:agecon:v:41:y:2010:i:3-4:p:329-335
    DOI: 10.1111/j.1574-0862.2010.00437.x
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    1. McCorriston, Steve & MacLaren, Donald, 2005. "The trade distorting effect of state trading enterprises in importing countries," European Economic Review, Elsevier, vol. 49(7), pages 1693-1715, October.
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    Cited by:

    1. Soregaroli, Claudio & Sckokai, Paolo, 2011. "Modelling Agricultural Commodity Markets under Imperfect Competition," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 116012, European Association of Agricultural Economists.
    2. McCorriston, Steve & MacLaren, Donald, 2012. "State Trading Enterprises as Non-Tariff Measures: Theory, Evidence and Future Research Directions," Conference papers 332214, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Paulus, Moritz & Trueby, Johannes & Growitsch, Christian, 2011. "Nations as Strategic Players in Global Commodity Markets: Evidence from World Coal Trade," EWI Working Papers 2011-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).

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