Scenario Analysis and Forecasting
Great changes have taken place since China’s reforms in 1978. Foreign trade in exports and imports has increased greatly. In the past three decades, China has grown from having a negligible role in the world trade to being the world’s largest export country and the second largest import country in merchandise export and import respectively, in 2012. With industrialization, urbanization and growth in population and income level, China’s grain demand increased rigidly. However, the limitations on grains production like shrinking arable land, shortage of water resources and climate change are becoming more and more serious. Grain security in China has become a top priority for national development. China imports more and more grains and agricultural trade deficit is becoming bigger and bigger. China’s agricultural trade faces more challenges. In order to promote domestic agricultural production and raise the income of farmers, Chinese government began having subsidies for agricultural production instead of taxing agriculture. Given the substantial reforms undertaken in China’s agricultural trade policies and reductions in domestic taxes on China’s agriculture, this study focuses on competitiveness of China’s agricultural trade and impacts of Chinese agricultural policy transition on domestic production and foreign trade. In this study a China’s agricultural policy and trade model including supply, demand, foreign trade and market clearing system is simulated and scenario analyses under different policy assumptions including changes of direct payments, subsidy on inputs, foreign trade policy and income growth are discussed. Based on this model, projections under several assumptions are conducted. The main findings include more direct payment on grains can stimulate domestic grain production; subsidy on machinery expenditures stimulates more grain production than on fertilizer and reduces the imports of grains; with CNY exchange rate appreciation, domestic production is reduced with lower relative import prices and China’s grain self-sufficiency declines. Based on the findings, the author recommends a set of policies oriented towards improving China’s agricultural trade balance and grain self-sufficiency.
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Farming & Rural Systems Economics Vol. 146ISSN 1616-98082014; XIV +200.; 21 x 14,8 cm; paper;
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