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Changes in trade and domestic distortions affecting China's agriculture

  • Huang, Jikun
  • Liu, Yu
  • Martin, Will
  • Rozelle, Scott

This paper assesses the implications of China's trade and domestic policies for incentives to producers in China. It uses a price comparison methodology (nominal rates of assistance--at the border and the farmgate), with adjustments for exchange rate distortions in the first part of the sample period (1981-1994). On average, distortions to agricultural incentives have been reduced. In the early 1980s, on average, China's domestic prices were far below international prices. There were substantial variations, however, between imported (which were being protected) and exported goods. During the 1980s and 1990s the gap between domestic and international prices for both imports and exports narrowed initially mainly due to the elimination of domestic policy distortions. Between the mid-1990s and 2004, trade liberalization policy furthered narrowed the gap between world and China farmgate prices. By the mid-2000s, China's agriculture was operating with only small price distortions.

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Article provided by Elsevier in its journal Food Policy.

Volume (Year): 34 (2009)
Issue (Month): 5 (October)
Pages: 407-416

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Handle: RePEc:eee:jfpoli:v:34:y:2009:i:5:p:407-416
Contact details of provider: Web page: http://www.elsevier.com/locate/foodpol

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  1. Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Measuring Distortions to Agricultural Incentives, Revisited," CEPR Discussion Papers 6924, C.E.P.R. Discussion Papers.
  2. Kiguel, Miguel & O'Connell, Stephen A, 1995. "Parallel Exchange Rates in Developing Countries," World Bank Research Observer, World Bank Group, vol. 10(1), pages 21-52, February.
  3. repec:cup:cbooks:9780521414951 is not listed on IDEAS
  4. Orden, David & Cheng, Fuzhi & Nguyen, Hoa & Grote, Ulrike & Thomas, Marcelle & Mullen, Kathleen & Sun, Dongsheng, 2007. "Agricultural producer support estimates for developing countries: Measurement issues and evidence from India, Indonesia, China, and Vietnam," Research reports 152, International Food Policy Research Institute (IFPRI).
  5. Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
  6. W. E. G. Salter, 1959. "Internal And External Balance: The Role Op Price And Expenditure Effects," The Economic Record, The Economic Society of Australia, vol. 35(71), pages 226-238, 08.
  7. Sicular, Terry, 1988. "Plan and Market in China's Agricultural Commerce," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 283-307, April.
  8. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-76, December.
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