China¡¯s Dairy Import Industry: An Economic Analysis of Influencing Trade Factors

One of the most dependable trends in a country¡¯s transformation from an undeveloped, to developing, and to developed country is a growing demand for dairy products and milk. As China has undergone an unprecedented transformation over the last few decades since Deng Xiaoping¡¯s Open Door Policy, China has followed this trend of an increasing demand for dairy products. As with other industries in mainland China, the domestic dairy industry is progressing at an incredibly fast rate. Yet at the same time when China is building its own industry to meet the growing demand, trade liberalization by joining the World Trade Organization has brought intense competition from foreign milk producers such as New Zealand, Australia, and the United States. This thesis examines the factors that influence various facets of the Chinese dairy industry, including import and export trade, consumer demand, and domestic and international competition. In addition to a deep background assessment of the Chinese dairy industry and market, a Constant Market Share econometric model is utilized to assess the varying levels of influence that different factors have on the industry by using three different time periods as a model of assessment for the whole industry.