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From taxing to subsidizing farmers in China Post-1978

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  • Kym Anderson

Abstract

This paper has three purposes: to document the pace and extent to which China’s policy regime has transitioned over the past four decades from taxing to subsidizing its farmers relative to its producers of other tradable goods; to present projections of the world economy to 2030 that suggest China will continue to become more food import-dependent under current policies and productivity growth rates; and to explore alternative policy instruments for remaining food secure and ensuring that farmers are not losers from economic growth. The data used to estimate the extent of distortions to producer incentives come from freely available World Bank and OECD sources that allow direct comparisons of China’s policy developments with those of more- and less-advanced economies. The estimates reveal that China has made the transition from negative to positive assistance to farmers far faster than the average developing country, and almost as fast as its Northeast Asian neighbours did in earlier decades at similar levels of real per capita incomes. That has helped to ensure China remained food self-sufficient during the first two decades of reform. However, food self-sufficiency is now declining and is projected to continue to do so over the next decade under current policies. Preventing food self-sufficiency from declining further by increasing agricultural protection is now unnecessary thanks to the information and communication technology revolution that enables the government to use conditional cash transfers to directly support the adjustment and well-being of poor farm households.

Suggested Citation

  • Kym Anderson, 2017. "From taxing to subsidizing farmers in China Post-1978," Departmental Working Papers 2017-13, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2017-13
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    File URL: https://acde.crawford.anu.edu.au/sites/default/files/publication/acde_crawford_anu_edu_au/2017-11/2017-13_andersonk_china_agric_policy_distortions_fin1117.pdf
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    References listed on IDEAS

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    Cited by:

    1. Xinru Han & Ping Xue & Ningning Zhang, 2021. "Impact of Grain Subsidy Reform on the Land Use of Smallholder Farms: Evidence from Huang-Huai-Hai Plain in China," Land, MDPI, Open Access Journal, vol. 10(9), pages 1-15, September.
    2. Yiwen, Zhang & Kant, Shashi & Liu, Jinlong, 2019. "Principal-agent relationships in rural governance and benefit sharing in community forestry: Evidence from a community forest enterprise in China," Forest Policy and Economics, Elsevier, vol. 107(C), pages 1-1.

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    More about this item

    Keywords

    agricultural support policies; China’s economic growth; food security; multiple exchange rates;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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