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Growth and Evolution in China's Agricultural Support Policies

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  • Gale, Fred

Abstract

China is perhaps the most prominent example of a developing country that has transitioned from taxing to supporting agriculture. In recent years, Chinese price supports and subsidies have risen at an accelerating pace after they were linked to rising production costs. Per-acre subsidy payments to grain producers now equal 7 to 15 percent of those producers’ gross income, but grain payments appear to have little influence on production decisions. Chinese authorities began raising price supports annually to bolster incentives and Chinese prices for major farm commodities are rising above world prices, helping to attract a surge of agricultural imports. U.S. agricultural exports to China tripled in value during the period when China’s agricultural support was accelerating. Overall, China’s expansion of support is loosely constrained by World Trade Organization (WTO) commitments, but the country’s price-support programs could exceed WTO limits in coming years. Chinese officials promise to continue increasing domestic policy support for agriculture, but the mix of policies may evolve as the Chinese agricultural sector becomes more commercialized and faces competitive pressures.

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Bibliographic Info

Paper provided by United States Department of Agriculture, Economic Research Service in its series Economic Research Report with number 155385.

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Date of creation: Aug 2013
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Handle: RePEc:ags:uersrr:155385

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Related research

Keywords: China; agricultural subsidies; price supports; direct payments; grain; World Trade Organization; Agricultural and Food Policy; International Development; International Relations/Trade;

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  1. Lohmar, Bryan & Gale, H. Frederick, Jr. & Tuan, Francis C. & Hansen, James M., 2009. "China's Ongoing Agricultural Modernization: Challenges Remain After 30 Years of Reform," Economic Information Bulletin 58316, United States Department of Agriculture, Economic Research Service.
  2. Gale, H. Frederick, Jr. & Buzby, Jean C., 2009. "Imports From China and Food Safety Issues," Economic Information Bulletin 58620, United States Department of Agriculture, Economic Research Service.
  3. Huang, Jikun & Wang, Xiaobing & Rozelle, Scott, 2013. "The subsidization of farming households in China’s agriculture," Food Policy, Elsevier, vol. 41(C), pages 124-132.
  4. Jikun Huang & Xiaobing Wang & Huayong Zhi & Zhurong Huang & Scott Rozelle, 2011. "Subsidies and distortions in China’s agriculture: evidence from producer‐level data," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(1), pages 53-71, 01.
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