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Presentation

2nd Revision

Introduction

 
Arguments - Intervention Possibilities
Agricultural Policy
What can be done to keep China's agricultural policy on its current path of economic and political reform? In particular, what can be done to promote policies that will increase China's future food security?
WB00860_.gif (262 bytes) In politics, it always makes sense to clearly identify the interests involved. China obviously has a vital interest in continued economic development and social stability. Large-scale food crises would threaten these objectives. Therefore, food security has top priority on the political agenda of China's leaders. On the other hand, the developed world, especially the large agricultural producers, have an interest in getting more open access to the Chinese market for their products. For example, the USA would probably like to increase agricultural exports to China to reduce its huge trade deficit with that country.
WB00860_.gif (262 bytes) In the food sector, in particular, these interests are compatible. If China were to open its grain market to the outside world, both sides could win. It is certainly more efficient for China to use its limited resources of arable land and water for the production of high-value agricultural products such as vegetables or fruits, which are labor intensive but require less land. On the other hand, China should consider importing a larger share of land-extensive agricultural products such as grain, oilseed and feed crops from foreign suppliers. For example, the USA, Australia, and Thailand have abundant land for cost-efficient production of grain, which could be shipped to China's southern coastal provinces at low prices. Currently, the Chinese government's insistence on self-sufficiency in grain stands in the way of such a rational economic choice. However, in the long run the policy might change if China's leaders calculate the costs of continuously pressing the farmers to step up domestic grain production. Within the next 20 years, China will need to increase annual grain supply by between 130 and 220 million tons, depending on the scenario considered. With grain imports in the range of 40 - 60 million tons, which could be easily provided by the world grain market, this task could be achieved much more easily and at considerably lower costs than by domestic production alone.
WB00860_.gif (262 bytes) From the perspective of the developed countries, it also makes sense to promote China's integration into the global economy and the World Trade Organization. This would not only intensify China's economic, cultural, and social relationships with the outside world (which is good in itself) and open up its potentially huge undeveloped market (which is good for business), but it would also positively affect the formulation of internal economic policies in China. China's further integration into the world market would strengthen its market orientation in all sectors of the domestic economy, including agriculture.
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Related Arguments

Agricultural Policy:   Trends     Impact    Data Quality    Prediction Error    Intervention Possibilities    Intervention Costs

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Revision 2.0 (First revision published in 1999)  - Copyright 2011 by Gerhard K. Heilig. All rights reserved. (First revision: Copyright 1999 by IIASA.)