China's grain marketing reform: a case study of Zhejiang, Jiangsu and Guangdong provinces

Abstract

Grain issues figure significantly in the formation of China’s agricultural policy and therefore attract tremendous attention both within and outside China. On the one hand, as a country that produces and consumes enormous amounts of grain, by carrying out grain marketing reforms China can make a great impact both on domestic grain production and marketing and on grain prices in the international market. On the other hand, studies of China’s grain marketing reforms at different stages of its agricultural development and under different macroeconomic conditions can serve as valuable references for other transition economies engaged in the formation of agricultural policy. Since 1978, China has made two attempts at grain marketing reform. The first attempt involved the introduction in 1985 of the ‘state contract procurement’ system to replace the traditional ‘unified procurement’ system, and the second the introduction in 1993 of the ‘fixing-the-quantity-and-freeing-the-price’ system to replace the ‘state contract procurement’ system. These attempts failed, however, and the original systems they had been intended to reform were soon re-adopted. Indeed, since 1994 the state has actually intensified its intervention in grain marketing, for example by introducing ‘governors’ grain responsibility’ in 1994 and ‘three policies and one reform’ in 1998. Although views on China’s grain policies since the mid 1990s vary widely, it is generally accepted that the changes in agricultural production and in the supply and demand of grain in China that took place after 1996 marked the beginning of a new state of agricultural development in the country. This new state of development is defined by the shift from a concern with quantitative increase to a concern with qualitative improvement and crop variation. In 2000, the Chinese government decided to experiment with the liberalisation of grain marketing in several economically developed coastal areas, including Zhejiang, Guangdong and Jiangsu provinces. This paper discusses this latest reform and attempts to determine the differences between it and the previous two reforms; its substance; and its future. Show more