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China's Agricultural Policy Transition: Impacts of Recent Reforms and Future Scenarios

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  • Wusheng Yu
  • Hans G. Jensen

Abstract

This article reviews recent developments in China's agricultural domestic support policy, especially the transition from taxing farmers and agriculture to providing direct subsidies to grain production and purchased inputs. A model-based quantitative analysis on the effects of these policy changes is presented. Simulation results suggest that recent policy changes have achieved the declared policy goals of increasing grain production and boosting farm income. Much of the increase in grain production and farm income can be attributed to higher per unit return to arable land, land reallocation to grain production and extra agricultural employment triggered by the policy changes. Based on the assumption that China's public assistance to agriculture and farmers will continue and rise, two hypothetical future scenarios are simulated. Using all the support permitted under WTO de minimis limits with existing instruments, China's policy will increase grain production, change trade patterns seemingly contrary to China's comparative advantage, increase rural employment and significantly increase farm income (by more than 12%). If, however, decoupled instruments are applied to raise China's agricultural domestic support to the same level, China's agricultural production and trade will remain unchanged, rural employment remain stable, but farm income will be increased by nearly 15%. Copyright (c) 2010 The Authors. Journal compilation (c) 2010 The Agricultural Economics Society.

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  • 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.
  • Handle: RePEc:bla:jageco:v:61:y:2010:i:2:p:343-368
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    Cited by:

    1. Wang, Xiaxin & Shen, Yan, 2014. "The effect of China's agricultural tax abolition on rural families' incomes and production," China Economic Review, Elsevier, vol. 29(C), pages 185-199.
    2. Houshyar, Ehsan & Zareifard, Hamid Reza & Grundmann, Philipp & Smith, Pete, 2015. "Determining efficiency of energy input for silage corn production: An econometric approach," Energy, Elsevier, vol. 93(P2), pages 2166-2174.
    3. repec:wyi:journl:002171 is not listed on IDEAS
    4. Tian, Qing & Holland, John H. & Brown, Daniel G., 2016. "Social and economic impacts of subsidy policies on rural development in the Poyang Lake Region, China: Insights from an agent-based model," Agricultural Systems, Elsevier, vol. 148(C), pages 12-27.
    5. Qin, Yu & Zhang, Xiaobo, 2016. "The Road to Specialization in Agricultural Production: Evidence from Rural China," World Development, Elsevier, vol. 77(C), pages 1-16.
    6. Feike, Til & Henseler, Martin, 2017. "Multiple Policy Instruments for Sustainable Water Management in Crop Production - A Modeling Study for the Chinese Aksu-Tarim Region," Ecological Economics, Elsevier, vol. 135(C), pages 42-54.
    7. Rosegrant, Mark W. & Koo, Jawoo & Cenacchi, Nicola & Ringler, Claudia & Robertson, Richard D. & Fisher, Myles & Cox, Cindy M. & Garrett, Karen & Perez, Nicostrato D. & Sabbagh, Pascale, 2014. "Food security in a world of natural resource scarcity: The role of agricultural technologies," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-89629-847-7, September.
    8. Yu, Bingxin & Chen, Kevin Z. & Zhang, Haisen, 2014. "Aligning public expenditure for agricultural development priorities under rapid transformation: The case of China:," IFPRI discussion papers 1397, International Food Policy Research Institute (IFPRI).
    9. Yi, Fujin & Sun, Dingqiang & Zhou, Yingheng, 2015. "Grain subsidy, liquidity constraints and food security—Impact of the grain subsidy program on the grain-sown areas in China," Food Policy, Elsevier, vol. 50(C), pages 114-124.
    10. Yi, Fujin & Lu, Wuyi & Zhou, Yingheng, 2015. "Cash Transfers and Multiplier Effect: Lessons from the Grain Subsidy Program in China," 2015 Conference, August 9-14, 2015, Milan, Italy 211877, International Association of Agricultural Economists.
    11. Yu, Bingxin & Chen, Kevin Z. & Zhang, Yumei & Zhang, Haisen, 2014. "Evolving public expenditure in Chinese agriculture: Definition, pattern, composition, and mechanism:," IFPRI discussion papers 1407, International Food Policy Research Institute (IFPRI).
    12. Brockhaus, Jan & Huang, Jikun & Hu, Jiliang & Kalkuhl, Matthias & von Braun, Joachim & Yang, Guolei, 2015. "Rice, wheat, and corn supply response in China," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205988, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    13. Meng, Lei, 2012. "Can grain subsidies impede rural–urban migration in hinterland China? Evidence from field surveys," China Economic Review, Elsevier, vol. 23(3), pages 729-741.
    14. Tianxiang Li & Tomas Baležentis & Lijuan Cao & Jing Zhu & Irena Kriščiukaitienė & Rasa Melnikienė, 2016. "Are the Changes in China’s Grain Production Sustainable: Extensive and Intensive Development by the LMDI Approach," Sustainability, MDPI, Open Access Journal, vol. 8(12), pages 1-24, November.
    15. 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.
    16. Lopez, Rigoberto A. & He, Xi & De Falcis, Eleonora, 2017. "What Drives China’s New Agricultural Subsidies?," World Development, Elsevier, vol. 93(C), pages 279-292.
    17. Yu, Xiaohua, 2014. "Monetary easing policy and long-run food prices: Evidence from China," Economic Modelling, Elsevier, vol. 40(C), pages 175-183.

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