China 2017 - Agricultural Deregulation and its Global Impact

  • ID: 4051434
  • Report
  • Region: Global, China
  • 55 pages
  • Briefing Media Ltd
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 China is one of the largest importers, exporters, and consumers of agricultural products in the world. By 2025 the amount of feed grains needed to meet the country’s demand for beef and veal, pork, and chicken could rise by between 31 and 43 per cent.

In order to boost domestic production and protect against price fluctuations, the Chinese  government instituted a system of price floors for rice, wheat, corn, soybeans, rapeseed,  and cotton.

 China’s system of price floors has led – as economic theory would predict – to excessive stocks, an increasing financial burden on the government, suppressed demand, and unsustainable farming practices.

 The Chinese government is now dismantling the price floor system, and it remains in place only for wheat and rice. It is likely that price floors for these products will be scrapped soon.  

The ending of this comprehensive system in such a major player in agricultural markets will have serious, worldwide effects.  As China brings its accumulated stocks to the market, these will depress prices. With this foreknowledge, markets could be expected to price this in, but there is great uncertainty over the actual size of Chinese stocks.

 In the longer run production will be affected.

 At lower prices, farms in China will produce less corn, soybeans, rapeseed, and cotton. Some land will move into non-agricultural uses; other land currently being used to produce  these products will be switched to producing others.

 The effect on world prices of China’s sell off of its agricultural stocks will likely be small. It is doubtful that China will become a big exporter of these products and quality concerns and increased demand domestically continue to provide an appetite for imports. In the longer run, prices will continue to be set by the forces of population, wealth, and productivity.

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Summary 

1 - Introduction - China’s economic and social background
 China’s economic miracle
 Social tensions in China 
 Chinese data

2 - China’s agricultural imperative
 China’s agricultural success story
 China’s agricultural geography
 China’s need for food
 Problems in Chinese agriculture

  •   Inefficiencies in Chinese agriculture
  •   Lack of agricultural land
  •   Quality of agricultural land
  •   The results of China’s agricultural issues

3 - China’s agricultural price support regime
 The evolution of China’s agricultural support regime

  •   The motive for support
  •   Enacting price supports
  •   The operation of China’s regime

 The scale of China’s regime

4 - Price floors in theory and practice
 The theory behind price floors 
 Chinese price floors in practice

  •   Prices
  •   Rice
  •   Wheat
  •   Corn
  •   Soybeans
  •   Rapeseed
  •   Cotton

5 - The likely consequences of unwinding the subsidy regime
 Changes in Chinese agriculture
 The effects

  • Short run effects
  •   Long run effects
  •   Extended effects

 Corn

  •   Exports
  •   Domestic demand
  •   Longer term effects
  •   Extended effects

 Soybeans

  •   Exports
  •   Domestic demand
  •   Longer term effects
  •   Extended effects

 Cotton

  •   Exports
  •   Domestic demand
  •   Longer term effects
  •   Extended effects

 Rice and wheat

6 - Conclusion

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