China's agricultural trade policy in the 1980s : the economic costs of food self-sufficiency

Abstract

This thesis examines options for China's food trade policy In the 1980s. The emphasis Is on the economic costs of food self-sufficiency. Despite the Increase In output in Chinese agriculture since the rural economic reform, it will be difficult to achieve the goal of food self-sufficiency in the medium term. China's smaller-than-average endowments of arable land and water per capita suggests that, as food demand grows, production costs will exceed those of better-endowed countries. To achieve overall self-sufficiency by 1995 through further protection would result in large income transfers from consumers to producers and net economic losses of up to 12% of GNP. Food policies of most East Asian economies protect farmers to ensure self-sufficiency in staple foods for human consumption. Such a policy would prove to be at least as costly as overall self-sufficiency, with similar levels of income transfers. There is no way of avoiding these costs in the framework of self-sufficiency through protection. Forcing higher rates of saving and slower growth of disposable income would help reduce food demand. However, in the longer run, it would be in China's economic interest to make great efforts to develop an internationally competitive agriculture reflecting its real comparative advantage, rather than to protect agriculture increasingly in order to maintain food self-sufficiency.