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Effects of Agricultural Subsidy Policies on Comparative Advantage and Production Protection in China

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  • Shi Zheng
  • Dayton Lambert
  • Sishu Wang
  • Zhigang Wang

Abstract

China has recently implemented a series of agricultural policy reforms to expand its agricultural sector and increase farm income. Subsidies supporting agricultural sector growth are the favored policy even though they are known to exert a distorting effect on markets. Using a Policy Analysis Matrix (PAM) model, we estimated the extent to which subsidies have distorted domestic markets and whether they have positively influenced China's comparative advantages in crop production and increased farm income. Results suggest that the effective protection of soybean and corn production has not significantly enhanced comparative advantage with respect to these commodities, while the effective protection of production factors used to produce wheat increased comparative advantage in wheat production.

Suggested Citation

  • Shi Zheng & Dayton Lambert & Sishu Wang & Zhigang Wang, 2013. "Effects of Agricultural Subsidy Policies on Comparative Advantage and Production Protection in China," Chinese Economy, Taylor & Francis Journals, vol. 46(1), pages 20-37, January.
    • Handle: RePEc:mes:chinec:v:46:y:2013:i:1:p:20-37
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    Cited by:

    1. Charles Peter Mgeni & Stefan Sieber & T. S. Amjath-Babu & Khamaldin Daud Mutabazi, 2018. "Can protectionism improve food security? Evidence from an imposed tariff on imported edible oil in Tanzania," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 10(4), pages 799-806, August.
    2. Chavas, Jean-Paul & Li, Jian, 2016. "On the Economics of Commodity Price Dynamics and Price Volatility," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235070, Agricultural and Applied Economics Association.

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