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

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  • Yu, Wusheng
  • Jensen, Hans Grinsted

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%.
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  • Yu, Wusheng & Jensen, Hans Grinsted, 2009. "China’s Agricultural Policy Transition: Impacts of Recent Reforms and Future Scenarios," 2009 Conference, August 16-22, 2009, Beijing, China 51682, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae09:51682
    DOI: 10.22004/ag.econ.51682
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. Wenjia Peng & Brian E. Robinson & Hua Zheng & Cong Li & Fengchun Wang & Ruonan Li, 2019. "Telecoupled Sustainable Livelihoods in an Era of Rural–Urban Dynamics: The Case of China," Sustainability, MDPI, Open Access Journal, vol. 11(9), pages 1-17, May.
    6. 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.
    7. Wang, Wenting & Wei, Longbao, 2019. "Impacts of agricultural price support policies on price variability and welfare: evidence from China’s soybean market," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 288334, Agricultural and Applied Economics Association.
    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. 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).
    10. 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.
    11. 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.
    12. repec:wyi:journl:002171 is not listed on IDEAS
    13. Yu, Xiaohua, 2014. "Monetary easing policy and long-run food prices: Evidence from China," Economic Modelling, Elsevier, vol. 40(C), pages 175-183.
    14. 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.
    15. Wenting Wang & Longbao Wei, 2021. "Impacts of agricultural price support policy on price variability and welfare: Evidence from China's soybean market," Agricultural Economics, International Association of Agricultural Economists, vol. 52(1), pages 3-17, January.
    16. Yinhao Wu & Enru Wang & Changhong Miao, 2019. "Fertilizer Use in China: The Role of Agricultural Support Policies," Sustainability, MDPI, Open Access Journal, vol. 11(16), pages 1-23, August.
    17. 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.
    18. 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.
    19. 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, Open Access Journal, vol. 12(16), pages 1-22, August.
    20. Kaixing Huang & Wenshou Yan & Jikun Huang, 2020. "Agricultural subsidies retard urbanisation in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1308-1327, October.
    21. 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).
    22. Mario A. González‐Corzo, 2020. "Agrarian Policy Changes and the Evolution of Land Tenure in Cuba," Economic Papers, The Economic Society of Australia, vol. 39(3), pages 239-258, September.
    23. 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.
    24. 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.
    25. 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.

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