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Fighting global food price rises in the developing world: the response of China and its effect on domestic and world markets

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  • Jun Yang
  • Huanguang Qiu
  • Jikun Huang
  • Scott Rozelle

Abstract

This article addresses how China is being affected by and is responding to the world food crisis. So far, Chinese officials have responded to higher world prices by drawing down stocks and limiting exports of major grains. These policy instruments were not available for soybeans, so domestic prices of soy and other oilseeds have risen with international prices. Using a global CGE model, we show that the initial world price rise was largely due to higher world oil prices and demand for biofuels as opposed to other factors, especially in maize and soybeans. China's response to this shock has kept domestic grain prices low relative to world grain markets and to domestic soybean prices. As grain stocks are depleted, however, demand growth will push domestic prices back into alignment. Anticipating this pressure on consumers and accelerating supply response through public investment will facilitate adjustment. Copyright (c) 2008 International Association of Agricultural Economists.

Suggested Citation

  • Jun Yang & Huanguang Qiu & Jikun Huang & Scott Rozelle, 2008. "Fighting global food price rises in the developing world: the response of China and its effect on domestic and world markets," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 453-464, November.
  • Handle: RePEc:bla:agecon:v:39:y:2008:i:s1:p:453-464
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    1. Yang, Jun & Wang, Xiaobing & Ma, Hengyun & Bai, Junfei & Jiang, Ye & Yu, Hai, 2014. "Potential usage, vertical value chain and challenge of biomass resource: Evidence from China’s crop residues," Applied Energy, Elsevier, vol. 114(C), pages 717-723.
    2. Li, Jian & Chavas, Jean-Paul & Etienne, Xiaoli & Li, Chongguang, 2016. "Commodity Price Bubbles and Macroeconomics: Evidence from Chinese Agricultural Markets," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235068, Agricultural and Applied Economics Association.
    3. Wusheng Yu & Hans G. Jensen, 2010. "China's Agricultural Policy Transition: Impacts of Recent Reforms and Future Scenarios," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 343-368.
    4. Lingling Wang & Tsunemi Watanabe, 2016. "A Stackelberg Game Theoretic Analysis of Incentive Effects under Perceived Risk for China’s Straw-Based Power Plant Supply Chain," Energies, MDPI, Open Access Journal, vol. 9(6), pages 1-20, June.
    5. Nazlioglu, Saban & Erdem, Cumhur & Soytas, Ugur, 2013. "Volatility spillover between oil and agricultural commodity markets," Energy Economics, Elsevier, vol. 36(C), pages 658-665.
    6. Craig Sugden, 2009. "Responding to High Commodity Prices," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 23(1), pages 79-105, May.
    7. Jikun Huang & Jun Zhang & Scott Rozelle, 2013. "The Political Economy of Food Pricing Policy in China," Working Papers id:5317, eSocialSciences.
    8. Bernhard Brümmer & Olaf Korn & Kristina Schlüßler & Tinoush Jamali Jaghdani, 2016. "Volatility in Oilseeds and Vegetable Oils Markets: Drivers and Spillovers," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 685-705, September.
    9. Taghizadeh-Hesary, Farhad & Rasoulinezhad, Ehsan & Yoshino, Naoyuki, 2018. "Volatility Linkages between Energy and Food Prices: Case of Selected Asian Countries," ADBI Working Papers 829, Asian Development Bank Institute.
    10. Yu, Xiaohua, 2014. "Monetary easing policy and long-run food prices: Evidence from China," Economic Modelling, Elsevier, vol. 40(C), pages 175-183.
    11. Jing You, 2014. "Dietary change, nutrient transition and food security in fast-growing China," Chapters,in: Handbook on Food, chapter 9, pages 204-245 Edward Elgar Publishing.
    12. Ma, Hengyun & Oxley, Les & Gibson, John & Li, Wen, 2010. "A survey of China's renewable energy economy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(1), pages 438-445, January.
    13. Yang, Guolei & Huang, Jikun & Kalkuhl, Matthias & von Braun, Joachim & Hu, Jiliang, 2015. "Spatial price transmission under different policy regimes: the case of Chinese soy and maize market," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205665, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    14. 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.
    15. Tetsuji Tanaka & Nobuhiro Hosoe, 2011. "What Drove the Crop Price Hikes in the Food Crisis?," GRIPS Discussion Papers 11-16, National Graduate Institute for Policy Studies.
    16. Awartani, Basel & Aktham, Maghyereh & Cherif, Guermat, 2016. "The connectedness between crude oil and financial markets: Evidence from implied volatility indices," Journal of Commodity Markets, Elsevier, vol. 4(1), pages 56-69.
    17. Tan, Ying & Sha, Wenbiao & Paudel, Krishna, 2017. "The Impact of Monetary Policy on Agricultural Price Index in China: A FAVAR Approach," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252676, Southern Agricultural Economics Association.
    18. Brockhaus, Jan & Kalkuhl, Matthias & Kozicka, Marta, 2016. "What Drives India’s Rice Stocks? Empirical Evidence," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235659, Agricultural and Applied Economics Association.
    19. Pieters, Hannah & Swinnen, Johan, 2016. "Trading-off volatility and distortions? Food policy during price spikes," Food Policy, Elsevier, vol. 61(C), pages 27-39.
    20. Zhang, Zibin & Lohr, Luanne & Escalante, Cesar & Wetzstein, Michael, 2010. "Food versus fuel: What do prices tell us?," Energy Policy, Elsevier, vol. 38(1), pages 445-451, January.
    21. Robert T. Jensen & Nolan H. Miller, 2008. "The impact of food price increases on caloric intake in China," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 465-476, November.
    22. Havlík, Petr & Schneider, Uwe A. & Schmid, Erwin & Böttcher, Hannes & Fritz, Steffen & Skalský, Rastislav & Aoki, Kentaro & Cara, Stéphane De & Kindermann, Georg & Kraxner, Florian & Leduc, Sylvain & , 2011. "Global land-use implications of first and second generation biofuel targets," Energy Policy, Elsevier, vol. 39(10), pages 5690-5702, October.
    23. Ito, Junichi & Ni, Jing, 2013. "Capital deepening, land use policy, and self-sufficiency in China's grain sector," China Economic Review, Elsevier, vol. 24(C), pages 95-107.

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