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Trade Policy Responses to Food Price Crisis and Implications for Existing Domestic Support Measures: The Case of China in 2008

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  • Yu, Wusheng
  • Jensen, Hans Grinsted

Abstract

Many national governments around the world applied export restrictions for achieving domestic market stabilization during the 2007/8 world food price crisis. However, current literature says little about how these export restrictions interact with existing domestic support measures in jointly determining domestic market outcomes. This paper analyzes this interaction by providing a quantitative assessment on how increased spending on agricultural domestic support in China offset the negative effects on grain production caused by the country‟s export restrictions and how these two types of measures jointly moderated rises of domestic grain prices. In particular, domestic and trade measures on key agricultural inputs such as fertilizers are shown to contribute significantly to expand grain outputs and reduce domestic market prices. While the short term goal in stabilizing domestic grain prices was achieved through these measures, large fiscal and efficiency costs were incurred, especially considering how the short term export restrictions seemingly necessitated the extra spending on input based domestic subsidies.

Suggested Citation

  • 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.
  • Handle: RePEc:ags:iaae12:126632
    DOI: 10.22004/ag.econ.126632
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    Cited by:

    1. Wusheng Yu & Jayatilleke Bandara, 2017. "India's Grain Security Policy in the Era of High Food Prices: A Computable General Equilibrium Analysis," The World Economy, Wiley Blackwell, vol. 40(8), pages 1547-1568, August.
    2. Jing Zhu & Wusheng Yu & Junying Wang & Christian Elleby, 2016. "Tariff Liberalisation, Price Transmission and Rural Welfare in China," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(1), pages 24-46, February.
    3. Jingdong Li & Weidong Liu & Zhouying Song, 2020. "Sustainability of the Adjustment Schemes in China’s Grain Price Support Policy—An Empirical Analysis Based on the Partial Equilibrium Model of Wheat," Sustainability, MDPI, vol. 12(16), pages 1-22, August.
    4. Wang, Ying & Bilsborrow, Richard E. & Zhang, Qi & Li, Jiangfeng & Song, Conghe, 2019. "Effects of payment for ecosystem services and agricultural subsidy programs on rural household land use decisions in China: Synergy or trade-off?," Land Use Policy, Elsevier, vol. 81(C), pages 785-801.
    5. Yang, Fan & Urban, Kirsten & Brockmeier, Martina & Bekkers, Eddy & Francois, Joseph, 2016. "Impact of Increasing Agricultural Domestic Support on Food Price Transmission," Conference papers 332806, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Bowen Chen & Nelson B. Villoria & Tian Xia, 2020. "Tariff quota administration in China's grain markets: An empirical assessment," Agricultural Economics, International Association of Agricultural Economists, vol. 51(2), pages 191-206, March.
    7. Jie Lyu & Xiaolei Li, 2019. "Effectiveness and Sustainability of Grain Price Support Policies in China," Sustainability, MDPI, vol. 11(9), pages 1-13, April.
    8. Yi, Fujin & Sun, Dingqiang, 2014. "Grain Subsidy, Liquidity Constraints and Food security—Impact of the Grain Subsidy Program on the Grain-Sown Areas in China," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169779, Agricultural and Applied Economics Association.
    9. Pieralli, Simone & Dominguez, Ignacio Perez, 2017. "The Uncertain Effects of Chinese Policy Reforms on Maize: The Return of China as a Maize Exporting Giant?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258106, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Environmental Economics and Policy; Food Security and Poverty;

    JEL classification:

    • 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

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