Fighting global food price rises in the developing world: the response of China and its effect on domestic and world markets |
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Authors: | Jun Yang Huanguang Qiu Jikun Huang Scott Rozelle |
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Institution: | 1. Center for Chinese Agricultural Policy, IGSNRR, Chinese Academy of Sciences, Jia 11 Dutun Road, Anwai, Beijing, 100101, China;2. Helen Farnsworth Senior Fellow and Professor of International Agricultural Policy, S‐ARARC, Freeman Spogli Institute, Stanford University, East Encina Hall, Stanford, CA 94305, USA |
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Abstract: | This article addresses how China is being affected by and is responding to the world food crisis. So far, Chinese officials have responded to higher world prices by drawing down stocks and limiting exports of major grains. These policy instruments were not available for soybeans, so domestic prices of soy and other oilseeds have risen with international prices. Using a global CGE model, we show that the initial world price rise was largely due to higher world oil prices and demand for biofuels as opposed to other factors, especially in maize and soybeans. China's response to this shock has kept domestic grain prices low relative to world grain markets and to domestic soybean prices. As grain stocks are depleted, however, demand growth will push domestic prices back into alignment. Anticipating this pressure on consumers and accelerating supply response through public investment will facilitate adjustment. |
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Keywords: | Q11 Q18 Q42 Q43 Food price Energy Biofuel Policy response |
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