The emergence of agricultural commodity markets in China

By conscious design, reformers in China only gradually focused their efforts on expanding the role of markets for the allocation of goods and services in the economy. As a result, markets—especially in the agricultural sector—developed slowly. Throughout the 1990s there was a heated debate about the degree to which markets had emerged. The main goal in this paper is to bring together a number of simple and revealing facts on the emergence of China's markets. To do so we examine several sets of price data and analyze spatial patterns of market prices contours over time and text the extent to which market prices are integrated among China's regions. According to our analysis, we find that to a remarkable degree, agricultural commodity markets have emerged; price patterns look much like those in market economies in the rest of the world and prices are highly integrated across space.     

Impact of China-ASEAN Free Trade Area on China＇s International Agricultural Trade and Its Regional Development

This study aims to examine the impact of the China‐ASEAN Free Trade Area (CAFTA) on China's international agricultural trade and its regional agricultural development, using the Global Trade Analysis Project model and the China Agricultural Decision Support System. Our analysis showed that: (i) CAFTA will improve resource allocation efficiencies for both China and ASEAN and will promote bilateral agricultural trade and, hence, will have positive effects on the economic development of both sides; (ii) CAFTA will accelerate China's export of the agricultural commodities in which it has comparative advantages, such as vegetables, wheat and horticultural products, but at the same time bring about a large increase in imports of commodities such as vegetable oil and sugar; and (iii) CAFTA will have significantly varying impacts on China's regional agricultural development because of large differences in the agricultural production structure in each region. Our results indicate that agriculture in the northern, northeastern and eastern regions of China will benefit from CAFTA, whereas agriculture development in southern China will suffer. Those regional specific impacts are quite different from the effects brought by multilateral free trade treaties, such as those of the WTO, which usually have positive effects on south China but negative impacts on the northern and western parts of China.     

China and the World Trade Organization

For nine long years China made determined but unsuccessful efforts to rejoin GATT, having gone through 21 rounds of protracted negotiations. China failed to become a founding member of WTO when it superseded GATT in January 1995. In 1989 GATT was about to work out the final terms of protocol for China's entry as a reforming socialist economy. But the Tiananmen event made the developed country members, led by the US, politicize the issue of China's membership. They also wanted to prise open the vast China market as a condition for China's entry; i.e. China to be admitted as a developed economy. China for its part regarded the price of its WTO membership as too exorbitant without being allowed a reasonable timetable for adjustment. Minister Wu Yi considered the US demands ‘absolutely unacceptable’. Hence the impasse over China's WTO membership continued. Apart from the imperative of trade diplomacy, however, the perceived benefits of WTO membership to China are difficult to capture. They are mainly general and long-term in nature, e.g. facilitating China's further economic reform and integrating China into the global economy. However, the costs and risks to China could be considerable, much depending on the exact protocol terms of China's membership. In general many state-owned enterprises and township-village enterprises would suffer from stiffer foreign competition. The effect of WTO on Chinese agriculture would be minimal, while the impact on the manufacturing sector could be quite disruptive. The service sector could fare even worse if no protective measures were to be taken. That explains why China needs to insist on developing-country terms of entry. Without doubt, China will eventually accede to WTO. It is a gross anomaly for this global multilateral trade body to continue excluding China, the world's 11th largest trading nation, on which also hinge the two other great trading entities of Hong Kong and Taiwan. There is increasing awareness of this point in the EU; and it will sooner or later also prevail in Washington.     

How much did China's WTO accession increase economic growth in resource-rich countries?

We provide an estimate of China's impact on the growth rate of resource-rich countries after its WTO accession on 11 December 2001. Our empirical approach follows the logic of the differences-in-differences estimator. In addition to temporal variation arising from the WTO accession, which we argue was exogenous to other countries' growth trajectories, we exploit spatial variation arising from differences in natural resource wealth. This allows us to compare changes in economic growth in the post-accession period relative to the pre-accession period between countries that were able to benefit from the surge in demand for industrial commodities brought about by China's WTO accession and countries that were less able to do so. We find that roughly one tenth of average annual post-accession growth in resource-rich countries was due to China's increased appetite for commodities. We use this finding to inform the debate about what will happen to economic growth in resource-rich countries as China rebalances and its demand for commodities weakens.     

Agricultural trade liberalization and poverty in China

The overall goal of this paper is to examine the impacts of trade liberalization on China's agriculture, in general, and poverty, in particular. The impacts on agriculture are analyzed by commodity and by region. Because different farmers (especially those in different income brackets) produce diverse sets of commodities, the main part of our paper analyzes the effects on households and their implications for the poverty through the simulation of household production and consumption changes in response to the trade-induced market prices changes on a disaggregated (by province), household-level basis. The results of our analysis lead to the conclusion that, unlike fears expressed in the popular press and by some scholars, the positive impacts of trade liberalization are actually greater than the negative ones. Although other effects on the rural economy from trade liberalization of other subsectors (such as textiles) may be equally large or even larger, this study's focus on the agricultural sector shows that there will be an impact from agricultural trade liberalization and that the net impact is positive for the average farm household in China. However, policymakers still need to be concerned. Not all households and not all commodities will be treated equally. Our findings show that poorer households, especially those in the provinces in the western parts of China, will be hurt. The main reason is that the farmers in Western China are currently producing commodities that are receiving positive rates of protection, rates of protection that will fall with additional trade liberalization. Hence, if policy makers want to minimize the impacts, there needs to be an effort to minimize the effect on these households either by direct assistance or by eliminating constraints that are keeping households from becoming more efficient by shifting their production more towards those commodities that will benefit from trade liberalization.     

The development strategy for china's travel service industry after china's WTO entry: Present status and future prospects

China's tourism market is growing in importance since China's accession to the World Trade Organization (WTO). It is likely that China's opening to the world market will lead to the further development of its travel service industry. Even though China will be confronted by some difficulties, its WTO commitment may have positive impacts on the travel service industry such as the development of technologies, introduction of advanced management strategies, improved industrial structure, and increased competition in the sector. This paper aims to explain the WTO‐related factors in China's travel service industry, analyzing and evaluating the sector's development strategy.     

Foreign direct investment in China: Policy,recent trend and impact 1

One of the most important elements of China's economic reform has been the promotion of foreign direct investment (FDI) inflow. Government polices on FDI have gone through different stages in their main objectives since the late‐1970s, from gradually opening to foreign investors, to actively encouraging inward investment, directing FDI in accordance with domestic industrial restructuring, and complying with China's World Trade Organization (WTO) obligations. FDI in China has experienced rapid growth especially since the mid‐1990s, as well as structural change. Most of the earlier investments were small scale, labor‐intensive and export‐oriented. In recent years, more investment has been large scale and more capital and technology intensive, aiming at both domestic and export markets. Moreover, increasingly more investment has come from the industrial world, and has located along the eastern coastal regions, in additional to the two southeastern provinces. FDI has played a crucial role in China's rapid growth, economic transition, and, mostly importantly, integration with the world. China's recent accession to the WTO provides more incentives to foreign investors. At the same time, it will also result in more intense competition for domestic firms.     

Dynamic price discovery in Chinese agricultural futures markets

Research has not fully explored how Chinese agricultural futures markets perform their price discovery function over time. Our paper examines the role of Chinese agricultural futures markets in the price discovery process based on three well-established measurements of average price discovery contribution, and more importantly, the dynamic price discovery measurement. Using daily futures and spot prices from fourteen agricultural commodities, we find eleven contracts are efficient in price discovery. Besides, market-oriented changes in policies strengthen the price discovery performance of most futures markets, except for commodities that rely heavily on imports from other countries. Our results also suggest that trading activity is particularly important in determining whether thinly traded contracts are efficient in price discovery. Our paper provides a comprehensive judgment involving both average and dynamic price discovery contribution measurements on assessing the efficiency of Chinese agricultural futures markets. Our results might also serve as a reminder that market-oriented reforms in the spot markets of commodities might be useful to intensify the pricing power of the futures markets.     

Pass-through Effects of Global Commodity Prices on China＇s Inflation： An Empirical Investigation

The present paper uses a two-step approach to estimate the pass-through effects of changes in international commodity prices and the RMB exchange rate on domestic consumer price inflation in China. We first estimate the pass-through effects of international commodity prices on producer prices and then estimate the pass-through effects of producer price inflation on consumer price inflation. We find that a l O-percent increase in international commodity prices would lead to China＇ s producer prices increasing by 1.2 percent 3 months later, which in turn would increase China＇ s domestic inflation by 0.24 percent over the same period. However, a 10-percent appreciation of the RMB exchange rate against the US dollar would help to reduce increases in producer prices by 4.4 percent over the following 3 months, which in turn would lead to a 0. 89-percent decline in consumer price inflation over the same period. Our findings suggest that appreciation of the RMB in an environment of rising global commodity prices and a weak US dollar could be an effective instrument to help contain inflation in China.     

What can Indonesia learn from China's industrial energy saving programs?

Even though Indonesia's CO₂ emissions are dominated by deforestation while China's are dominated by industry, Indonesia has much to learn from China's industrial energy saving programs. To begin with, it is only a matter of time before Indonesia's emissions from fossil fuels overtake those from deforestation. Given the long technological lock-in effects of energy systems and industries, Indonesia needs to think now about how it will tackle this problem. There are other reasons for believing that Indonesia might learn something from China – the CO₂ intensities of GDP, of industry and of cement production have been rising in Indonesia, while they are falling in China. China's better intensity performance is due to policies that Indonesia would do well to follow – adopting a technological catch-up industrial development strategy; raising energy prices to scarcity values; liberalising domestic markets and opening the economy to trade and investment; and mounting a massive energy saving program.     

Understanding China's demand for resource imports

Is China's demand for resources driven predominantly by domestic factors or by global demand for its exports? The answer to this question is of interest given the highly resource-intensive nature of China's growth, and is important for many resource-exporting countries, such as Australia, Brazil, Canada and India. This paper provides evidence that China's (mainly manufacturing) exports have been a significant driver of its demand for resource commodities over recent decades. First, it employs input–output tables to demonstrate that, historically, manufacturing has been at least as important as construction as a driver of China's demand for resource-intensive metal products. Second, it shows that global trade in non-oil resource commodities can be described by the gravity model of trade. Using this model it is found that, controlling for other determinants of resource trade, exports (and the manufacturing sector more generally) are a sizeable and significant determinant of a country's resource imports, and that this has been true for China as well as for other countries.     

The Efficiency of the Chinese Commodity Futures Markets： Development and Empirical Evidence

I. Introduction In the early 1980s China set about transforming its moribund economy by adopting, in stages, various elements of the market-based systems. Among the reforms were thederegulation of prices and the introduction of financial markets for assets. The first stock market was set up in Shanghai in 1991 and in the same year the first commodities market opened in Zhengzhou, Henan Province. Since then, both the stock market and the commodities futures markets have expanded substantiall…     

我国农产品价格与热钱的实证研究

自2005年中国汇率形成机制改革以来,热钱流入中国的话题就开始趋热。在2006年末,世界农产品价格大幅上涨,围绕粮食、食品的国内外投资和交易成为新的经济热点。鉴于最近中国农产品价格发生了强烈波动的事实和农产品市场的重要性,本文通过对热钱规模和农产品价格指数的月度数据进行实证分析,得出热钱与农产品价格存在均衡关系,是农产品价格变化的Granger原因。     

Are China's Farms Growing?

China's agricultural sector faces challenges because most farms are still small scale. China's policy is to encourage the consolidation of farms and promote farms that are larger in scale. A question that arises is: Are China's farms growing? The goal of the present paper is to determine whether large farms in China have emerged or if farms remain small. To meet this goal, we systematically document the trends in the operational sizes of China's farms and measure the determinants of changes in farm size. Using a nationally representative dataset, the study shows that in 2013 China's farming sector was still mostly characterized by small‐scale farms. However, at the same time, there is an emerging class of middle‐sized and larger‐sized farms. Most large farms are being run by households but there is a set of large farms that are company/cooperative‐run. Today, farmers on larger farms are younger and better educated than the average farmer.     

INDONESIA'S TEXTILES AND APPAREL: THE CHALLENGES AHEAD

International rules governing textiles and apparel trade are undergoing transformation. The Multi-Fibre Arrangement (MFA) is being phased out, and as of January 2005 textiles and apparel trade will be conducted under World Trade Organization (WTO) rules. For Indonesia, this presents challenges and opportunities. The global trading system is increasingly seeing the introduction of preferential trade agreements (PTAs) that liberalise trade among members but discriminate against nonmembers. Major markets are negotiating new PTAs that divert trade away from low-cost non-member producers such as Indonesia. China's entry into the WTO allows producers there to take advantage of liberalised quotas and the integration of textile and apparel products into the tariff-based trade system as of 2002. With rising domestic production costs, increased local government interventions and poor tax administration, Indonesian producers face a 'double squeeze'. This paper outlines the key challenges confronting the sector and makes recommendations for sustaining exports in coming years.     

Changes in Chinese Competitiveness in Major Food Products: Implications for WTO Membership

Chinese entry to the WTO in December 2001 marks a new phase in agricultural trade, both nationally and globally. After a context review of Chinese agriculture and WTO-related policy issues, this paper first uses a Balassa index approach to examine China's relative competitiveness in some major food products over the period since 1985, followed by an analysis of price-cost ratios and production cost structures for these products. It is found that China has revealed comparative advantages in meat products but disadvantages in cereals. With limited land resources, its production and trade competitiveness has declined despite rapid substitution of capital for labour, due to a marked rise in relative labour price in agriculture. In the long run, it is expected that WTO membership will boost Chinese agricultural trade, but its impact on competitiveness will probably depend more on production costs, and will differ between crops and animal products.     

Will China's WTO accession worsen farm household incomes?

Many fear China's accession to the World Trade Organization (WTO) will impoverish its farmers via greater import competition in its agricultural markets. We explore that possibility bearing in mind that, even if producer prices of some (land-intensive) farm products fall, prices of other (labor-intensive) farm and nonfarm products could rise. New estimates, from the global, economy-wide numerical simulation model known as Global Trade Analysis Project (GTAP), of the likely changes in agricultural and other product prices as a result of WTO accession, are drawn on to examine empirically the real income implications of China's WTO accession. The results suggest farm–nonfarm income inequality may well rise within China but rural–urban income inequality need not. The article concludes with some policy suggestions for alleviating any pockets of farm household poverty that may emerge as a result of WTO accession.     

What Determines China's Grain Imports and Self‐sufficiency? The Role of Rising Domestic Costs and Varying World Market Prices

China's grain sectors have faced unprecedented challenges in recent years as the ever‐increasing and historically high level of grain output has failed to reduce grain imports. On the contrary, high grain imports and high domestic stock have accompanied historically high domestic output, a situation dubbed the “triple high” phenomenon in current policy discussion. This paper explores the role of widening domestic–world market price gaps in determining the triple high phenomenon. Unlike earlier studies that relied on production capacities, this paper argues that domestic production and demand (hence imports) are functions of domestic and world market prices and proposes an analytical framework to explicitly capture such price gaps under restricted trade linkages in general equilibrium. Following this approach, a set of price scenarios for the 2011–2020 period are constructed and simulated in a computable general equilibrium model. Results from the core scenarios, in which recent domestic and world market price trends are assumed to continue, suggest that further widening price gaps would substantially increase grain imports and reduce domestic output (by 60 million tons) and self‐sufficiency ratios from base levels. In the alternative scenarios with larger (smaller) price gaps, we find higher (lower) imports and larger (smaller) decreases in domestic output and self‐sufficiency ratios. Such results provide important policy implications as China's agricultural policy undergoes significant adjustment.     

Policy Options for China＇s Bio-ethanol Development and the Implications for Its Agricultural Economy

The present paper analyzes the potential impacts of bio-ethanol expansion on agricultural production, food prices and farmers＇ incomes in different regions of China. The results show that increase in demand for feedstock to produce bio-ethanol will lead to large increase in the prices of agricultural products. The increase in prices will trigger a significant rise in the production of feedstock at the cost of lower rice and wheat production. The study also reveals that the impacts of bio-ethanol on farmers＂ incomes vary largely among regions and farmer groups. Given the expected expansion of bio-ethanol production in the future, and the limited land resources for feedstock production in China, the viability of different crops as feedstock for bio-ethanol requires careful analysis before a large-scale expansion of China＇s bio-ethanol program. Bio-ethanol production in China should be relying more on the second generation of bio-ethanol technologies （i.e. using celluloses to produce bio-ethanol）, and China＇s government should increase research investment in this field.     

国内油价高涨的主因——基于VAR的实证分析

近年来．国际原油价格强势上扬，国内原油价格也不断上调。尽管一些学者从国内需求增加和国内外原油价格接轨的角度来说明目前原油和成品油的高位，但这些理论似乎都无法完全解释当前油价暴涨的现象。本文从原油和成品油的市场结构和定价机制出发，基于VAK模型证明了国内油价主要为短线预期带动所致．这种预期从国外传递到国内并导致了国内油价的上涨。因此通过改革油品的定价机制且完善和适当干预国内原油期货交易市场，可以打压这种非理性预期，抑制油价飙升的势头。