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China's Agricultural Policy Transition: Impacts of Recent Reforms and Future Scenarios

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  • Wusheng Yu
  • Hans G. Jensen

Abstract

This article reviews recent developments in China's agricultural domestic support policy, especially the transition from taxing farmers and agriculture to providing direct subsidies to grain production and purchased inputs. A model-based quantitative analysis on the effects of these policy changes is presented. Simulation results suggest that recent policy changes have achieved the declared policy goals of increasing grain production and boosting farm income. Much of the increase in grain production and farm income can be attributed to higher per unit return to arable land, land reallocation to grain production and extra agricultural employment triggered by the policy changes. Based on the assumption that China's public assistance to agriculture and farmers will continue and rise, two hypothetical future scenarios are simulated. Using all the support permitted under WTO de minimis limits with existing instruments, China's policy will increase grain production, change trade patterns seemingly contrary to China's comparative advantage, increase rural employment and significantly increase farm income (by more than 12%). If, however, decoupled instruments are applied to raise China's agricultural domestic support to the same level, China's agricultural production and trade will remain unchanged, rural employment remain stable, but farm income will be increased by nearly 15%. Copyright (c) 2010 The Authors. Journal compilation (c) 2010 The Agricultural Economics Society.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Agricultural Economics.

Volume (Year): 61 (2010)
Issue (Month): 2 ()
Pages: 343-368

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Handle: RePEc:bla:jageco:v:61:y:2010:i:2:p:343-368

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  1. Brink, Lars, 2007. "Classifying, Measuring and Analyzing WTO Domestic Support in Agriculture: Some Conceptual Distinctions," Working Papers 14581, International Agricultural Trade Research Consortium.
  2. Malcolm, Gerard, 1998. "Adjusting Tax Rates in the GTAP Data Base," GTAP Technical Papers 315, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  3. Carter, Colin A. & Li, Xianghong, 2002. "Implications of World Trade Organisation accession for China’s agricultural trade patterns," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(2), June.
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Cited by:
  1. Rosegrant, Mark W. & Koo, Jawoo & Cenacchi, Nicola & Ringler, Claudia & Robertson, Richard D. & Fisher, Myles & Cox, Cindy M. & Garrett, Karen & Perez, Nicostrato D. & Sabbagh, Pascale, 2014. "Food security in a world of natural resource scarcity: The role of agricultural technologies," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-89629-847-7.
  2. repec:wyi:journl:002171 is not listed on IDEAS
  3. Meng, Lei, 2012. "Can grain subsidies impede rural–urban migration in hinterland China? Evidence from field surveys," China Economic Review, Elsevier, vol. 23(3), pages 729-741.

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