Trade policy responses to food price rises and implications for existing domestic support measures: the case of China in 2008
AbstractExisting literature on the 2007/8 food price crisis focuses on the causes and poverty and hunger consequences of the crisis and seems to be less concerned with the interactions of different policy measures applied by governments. As such, the relative effectiveness, interactions and costs of these policy actions are often not satisfactorily explored. This paper provides a first preliminary quantitative assessment on the individual and joint effects of China’s short term trade policy actions and existing domestic support measures on domestic market prices, outputs, trade flows and farm income, using a global CGE model characterized with detailed and up-to-date policy information for China in the year of 2008. A series of interesting results emerge from our simulations. First, China’s agricultural outputs for many products are estimated to be boosted by up to 1.8 percentage by all the policy interventions combined, indicating that the extra domestic support in 2008 (relative to the pre-crisis level) is able to compensate for the lowered outputs due to the short term trade policy measures. The most stringent export restriction placed on wheat, however, reduces agricultural incentive so much that the observed domestic support measure is not able to compensate the lost domestic production. Second, while both the short term trade policy measures and existing domestic measures are able to reduce domestic market price, roughly two-thirds of the price reductions are due to the increased spending on the domestic measures. Third, the domestic market price reduction effects of the observed policy measures are shown to be large and significant, relative to the observed agriculture and food price indexes in China in 2008. Lastly, while China seems to be quite successful in tackling the food price inflation issue using a combination of policy measures, the fiscal and efficiency costs are not negligible, especially if one considers the extra government spending on the input subsidies necessitated by the insulating trade and border policy measures.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 115970.
Date of creation: 02 Sep 2011
Date of revision:
Demand and Price Analysis; International Relations/Trade;
Other versions of this item:
- Yu, Wusheng & Jensen, Hans Grinsted, 2012. "Trade Policy Responses to Food Price Crisis and Implications for Existing Domestic Support Measures: The Case of China in 2008," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126632, International Association of Agricultural Economists.
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.