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Optimal Chinese Agricultural Trade Patterns under the Laws of Comparative Advantage

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Abstract

The gradual liberalization of Chinese economic sectors and the associated growth in the income of Chinese consumers in recent years has created interest in how China will influence world agricultural markets should it decide to liberalize its food sector. Using Chinese agricultural and resources data and an adaptation of the Heckscher-Ohlin-Vanek international trade model, Hayes and Fuller project what Chinese trade, production, and consumption patters would be if China allowed the laws of comparative advantage to direct production and trade decisions. They show that today's Chinese agriculture is dramatically different from what would have evolved had it been open to trade and factor mobility. In particular, the use of capital is many times lower than it would otherwise be, and the use of labor is many times greater.

Suggested Citation

  • Dermot J. Hayes & Frank H. Fuller, 1999. "Optimal Chinese Agricultural Trade Patterns under the Laws of Comparative Advantage," Center for Agricultural and Rural Development (CARD) Publications 99-wp233, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:99-wp233
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    1. Dermot J. Hayes & Alexander Kumi & S.R. Johnson, 1995. "Trade Impacts of Soviet Reform: A Heckscher-Ohlin-Vanek Approach," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 17(2), pages 131-145.
    2. Bowen, Harry P & Leamer, Edward E & Sveikauskas, Leo, 1987. "Multicountry, Multifactor Tests of the Factor Abundance Theory," American Economic Review, American Economic Association, vol. 77(5), pages 791-809, December.
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    1. Nin, Alejandro & Hertel, Thomas W. & Foster, Kenneth & Rae, Allan, 2004. "Productivity growth, catching-up and uncertainty in China's meat trade," Agricultural Economics, Blackwell, vol. 31(1), pages 1-16, July.
    2. Cheng, Fuzhi, 2008. "China: Shadow WTO agricultural domestic support notifications," IFPRI discussion papers 793, International Food Policy Research Institute (IFPRI).

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