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China’s Food and Agriculture: Issues for the 21st Century. Fred Gale, editor,
Market and Trade Economics Division, Economic Research Service, U.S.
Department of Agriculture. Agriculture Information Bulletin No. 775.
Abstract
China’s impact on world agricultural markets in coming decades will depend on
many factors. Growing income and transition to modern urban lifestyles will
increase demand for all foods, but demand will shift toward meat and high-value
products. WTO accession may increase openness of China’s agricultural trade and
allow more imports. An understanding of geographic variations of consumption,
production, trade, and policy is critical to understanding the vast China market.
Development of transportation infrastructure and market channels will make it
easier for food products to reach consumers. China’s approach to biotechnology
and its reform of institutions for allocating land, labor, and water inputs have
important implications for agricultural productive capacity.
Keywords: China, food, agriculture, production, consumption, regions, international trade, biotechnology, livestock, land, irrigation, retail, transportation,
marketing, rural development, labor markets, statistics.
Acknowledgments
Praveen Dixit of USDA’s Economic Research Service (ERS) played a key role in
conceptualizing and overseeing this report. Bill Coyle, John Dunmore, and John
Dyck of ERS, Lynn Alfalla of USDA’s Foreign Agricultural Service, Carol
Goodloe of USDA’s Office of the Chief Economist, Eric Wailes and Frank Fuller
of the University of Arkansas, and Brad Gilmour of Agriculture and Agri-food
Canada provided valuable comments on the entire report. Comments by John
Beghin of Iowa State University, D. Gale Johnson of the University of Chicago,
and Carl Pray of Rutgers University improved the quality of several articles.
Special thanks are extended to John Weber, Wynnice Pointer-Napper, and
Victor Phillips for editorial and design assistance.
1800 M Street, NW
Washington, DC 20036-5831
April 2002
Contents
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
China at a Glance
A Statistical Overview of China’s Food and Agriculture . . . . . . . . . . . . . . . . . .5
Issues in China’s Food and Agriculture
How Will Rising Income Affect the Structure of Food Demand? . . . . . . . . . .10
A Maturing Retail Sector: Wider Channels for Food Imports? . . . . . . . . . . . .14
Rising Demand for Meat: Who Will Feed China’s Hogs? . . . . . . . . . . . . . . . .17
Regions in China: One Market or Many? . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Transportation and Distribution: Will Bottlenecks Be Eliminated? . . . . . . . . .24
Will China’s Agricultural Trade Reflect Its Comparative Advantage? . . . . . . .27
How Might China Protect Its Agricultural Sector? . . . . . . . . . . . . . . . . . . . . .31
Is Biotechnology in China’s Future? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Does China’s Land-Tenure System Discourage Structural Adjustment? . . . . .38
Will Water Scarcity Affect Agricultural Production in China? . . . . . . . . . . . . .41
Agricultural Labor: Where Are the Jobs? . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Can Rural Income Growth Accelerate? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
China’s Statistics: Are They Reliable? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Appendix Tables
China, basic economic statistics, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
China, basic agricultural statistics, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Value of China’s major agricultural exports, 1995-2000 . . . . . . . . . . . . . . . . .55
Value of China’s major agricultural imports, 1995-2000 . . . . . . . . . . . . . . . . .56
U.S. exports of agricultural, fish, and forestry products
to China, 1995-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Basic statistics by province, 1999-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
ii China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Summary
As the 21st century opens, China stands ready to assert itself as a major player in
global markets. Its accession to the World Trade Organization (WTO) is the latest
step in China’s incremental journey from an economy characterized by planning and
self-sufficiency to one that is market driven and globally integrated. How will
China’s role in world agricultural trade evolve in coming years? Will it continue to
integrate its economy with world markets? Will it import products that can be grown
more efficiently in countries with more abundant land and water resources? Or will
China maintain its past commitments to self-sufficiency in grains? Will the government allow markets to play a greater role in agriculture or will central planning and
government-supported monopolies continue to play dominant roles?
China is one of the world’s largest and most volatile customers for agricultural products. Yet, for a country of its size and limited resource endowment, its level of agricultural imports is modest. China tends to import bulk commodities and items used as
intermediate inputs in labor-intensive manufacturing. China is a major exporter of
high-value, labor-intensive food products, such as manufactured foods, animal products, fish, vegetables, and fruits. China’s agricultural exports go largely to other Asian
markets. Although per capita incomes and food expenditures in China are still low,
food security is not a problem for most of the country’s population. Food-consumption levels have grown and will continue to grow as the country grows richer, but this
effect will further strain China’s limited land and water resources.
Income growth and urbanization are likely to boost food demand considerably and
change the mix of foods consumed in China. As incomes grow, demand for meat,
fish, vegetable oils, and dairy products will grow particularly fast. The country’s transition from rural semi-subsistence to urban lifestyles will also have profound impacts
on consumption patterns, shifting demand from self-grown rice, wheat, and vegetables
to fish, meat, processed foods, and restaurant meals. Consumers will also pay more
attention to food quality, and they may demand foods with specific attributes.
Until the 1980s, there was relatively little value-added in China’s food sector, as
consumers prepared most meals at home using rice, noodles, raw vegetables, and
meat produced at home, purchased from state-run foodstuff stores, or purchased
directly from farmers. In the 1980s and 1990s, China’s food processing and food
retailing industries grew remarkably fast, as consumers demanded more quality
and convenience in foods. Modern supermarkets are now the country’s most widespread retail outlet for food, but they are being challenged by emerging hypermarkets, most of which are owned by foreign chains. Hypermarkets are introducing
China to modern supply chain management techniques designed to improve efficiency in wholesaling and distribution. These developments may open new channels for high-value food imports. The demand for quality, uniform farm products
in high volumes generated by modern processing and retailing may transform agricultural production in China.
The increase in meat consumption may be one of the most important developments
in China’s agricultural sector. Per capita meat and egg consumption by urban residents (not including away-from-home meat consumption) increased an average of
1.5 percent annually from 1985 to 1999. China produces nearly half of the world’s
pork and is the world’s second-largest poultry producer and third-largest beef
producer. The meat industry is expected to grow further to supply the country’s
Economic Research Service/USDA
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 iii
growing appetite for meat. Livestock production is shifting from small-scale
household production to larger, more commercialized operations. Most of China’s
growing demand for livestock products will be supplied by domestic producers,
predominantly specialized household and commercial livestock operations.
However, these farms will increasingly rely on imported corn and soybeans or
soymeal to feed their growing livestock numbers.
As exporters prepare to enter the “China market,” it is important to keep in mind
the regional diversity of the country. Important differences in development level,
living standards, and reliance on trade are evident between northern and southern
China, eastern and western China, and urban and rural China. These differences
seem to be magnified as rapidly growing coastal cities pull further ahead of inland
cities and rural areas. Historically, China’s provinces have competed with one
another to develop their local industries, a practice that dampened interregional
trade and encouraged inefficient industry structure and overcapacity. Greater
competition brought about by the country’s WTO accession will likely encourage a
more integrated national economy with fewer, more efficient firms.
The rapid development of transportation and marketing infrastructure is also
playing a role in integrating the national economy. However, transportation and
logistics costs account for an estimated one-fifth or more of retail prices in China,
much higher than in developed countries. Marketing costs will need to be reduced
to allow farmers in China’s interior to compete for markets on China’s coast and
overseas. Inadequate port facilities and lack of warehousing and cold storage facilities impede both domestic and international trade. Increased competition after the
country’s WTO accession will likely push China’s food marketing system to
squeeze out inefficiencies and reduce farm-retail margins.
China’s agricultural trade has grown slowly, especially in comparison with its
booming merchandise trade. The country’s goal of food self-sufficiency has led policymakers to restrain imports of land-intensive grains, the production of which has a
high opportunity cost in land-scarce China. In the years leading up to WTO accession,
China still maintained many barriers to agricultural trade, but it has liberalized trade
considerably since the 1980s. In accordance with its membership in the WTO, China
will lower tariffs, weaken state trading monopolies, increase the openness of import
license and quota allocation, and require publication of trade regulations, thus weakening most of the policy instruments the government has used to restrain agricultural
imports. China’s WTO commitments call for annual tariff reductions that will cut the
average agricultural tariff to a relatively low 17 percent by 2004. In the first few years
after WTO accession, China will allow limited quantities of important agricultural
commodities (grains, cotton, vegetable oils, wool, and sugar) to enter the country at
low tariffs of 1-9 percent. At the same time, WTO entry may open more markets for
China’s labor-intensive exports, potentially moving China’s trade patterns in a direction that will make more efficient use of the country’s resource endowment.
From the 1950s through the early 1990s, China taxed its agricultural sector by
procuring commodities at below-market prices to subsidize urban consumption and
industrial development. During the 1990s, central government taxation of farmers
receded (although local taxes and fees have become more of a burden for farmers).
In the late 1990s, the government procured grain at above-market support prices
and market prices of some commodities rose above world prices. As its control
over trade weakens after the country’s WTO accession, China’s government may
look at other means of protecting and subsidizing farmers to maintain a degree of
iv China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
food self-sufficiency and social stability. Government subsidies for China’s farmers
are minimal now and both “amber-box” (potentially price-distorting subsidies) and
“green-box” (infrastructure, education, and other subsidies not tied to prices)
spending could rise considerably while staying within China’s WTO commitments.
Since the 1980s, China’s government has heavily supported research in biotechnology, including the development of high-yielding, insect- and drought-resistant
plant varieties that potentially could allow farmers to produce more food from
China’s limited land area. However, China now seems to be taking a cautious
approach to biotechnology. Genetically modified (GM) varieties of most of
China’s major crops have been developed, but only a few have been approved for
commercial use. In 2001, the government published regulations on labeling of GM
foods, which disrupted imports of soybeans, most of which are grown from GM
seeds in the United States and South America. The regulations left out details that
would determine the stringency of the regulations, leaving much uncertainty about
China’s approach to biotechnology.
Land and water are key agricultural inputs that are limiting factors in China’s agricultural production capacity. Indeed, the current level of use of these inputs may be
unsustainable. Surface water supplies have dwindled in much of northern China, and
ground water is being depleted through heavy agricultural, industrial, and household
use. Environmentally fragile cultivated land is being returned to forests and grass
cover, while some highly productive agricultural land is being lost to urbanization.
Much of China’s economy is now governed by market forces, but land and water are
not. Farmland is owned collectively by villages, and village leaders allocate land-use
rights to households in their village. Land cannot be bought or sold by individual
farmers, and land rentals are relatively uncommon and mostly informal. The landtenure system is equitable, but the lack of land markets impedes the readjustment of
land to its most efficient use. Water is exploited as a common property resource, and
low marginal prices lead to overuse. The development of improved institutions to
manage and allocate scarce land and water resources will be crucial to expanding
China’s agricultural production capacity.
Labor is China’s most abundant resource, and roughly half of the country’s
workers are employed in agriculture, where incomes are low. The creation of
nonfarm jobs for China’s large rural population is critical to the country’s
economic development. Job creation will be a difficult challenge, as many rural
and urban employers will face competitive pressures to cut costs after China’s
WTO entry, thus making employers less inclined to hire more workers. China will
need to develop credit markets in rural areas and reverse its historical urban bias in
education, technology, and infrastructure investment to spur development in the
country’s rural hinterland and create new jobs. The easing of restrictions on ruralurban migration will also be necessary. Service industries, which tend to concentrate in urban areas, will account for much of China’s job growth.
Reliable statistical information is needed to accurately assess China’s development
and for markets to work efficiently. Many market analysts distrust China’s official
statistics, many of which rely on a bureaucratic bottom-up reporting system set up for
a centrally planned economy. Improvements in China’s statistical system, including
implementation of modern survey methods and reconciliation of duplicative statistics
produced by multiple agencies, will improve the functioning of markets. It will be
equally important for China to increase transparency by publishing important
numbers, such as grain and cotton stocks, which are now considered state secrets.
Economic Research Service/USDA
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 v
Author Affiliations
Colin Carter
University of California-Davis
Wen Chern
Ohio State University
Xinshen Diao
International Food Policy Research Institute
Cheng Fang
Iowa State University
Frank Fuller
University of Arkansas
Fred Gale
Economic Research Service, USDA
Brad Gilmour
Agriculture and Agri-food Canada
Hsin-Hui Hsu
Economic Research Service, USDA
William Lin
Economic Research Service, USDA
Bryan Lohmar
Economic Research Service, USDA
Albert Park
University of Michigan
Scott Rozelle
University of California-Davis
Agapi Somwaru
Economic Research Service, USDA
Francis Tuan
Economic Research Service, USDA
Eric Wailes
University of Arkansas
Jinxia Wang
Center For Chinese Agricultural Policy,
Chinese Academy of Sciences
Funing Zhong
Nanjing Agricultural University
vi China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
China’s Food and Agriculture:
Issues for the 21st Century
Introduction
tainty to commodity markets. With its new membership in the WTO, however, China may become a larger
and steadier trading partner in markets for food and
agricultural products.
As the 21st century opens, China stands ready to assert
itself as a major player in global markets. Its accession
to the World Trade Organization (WTO) is the latest
step in China’s incremental journey from an economy
characterized by planning and self-sufficiency to one
that is market driven and globally integrated. China
may undergo unprecedented changes in the coming
century as it transforms itself from a largely rural,
centrally planned, low-tech economy into an urbanized, market- and consumer-driven economy, where
new technologies are used and developed.
A Key Player in Agricultural Trade
The food and agricultural sector in China may see
some of the most dramatic changes. With one-fifth of
the world’s consumers, one of the world’s fastestgrowing economies, and a limited endowment of
arable land, China is seen by many as a potential
source of increased demand in world food markets.
Currently, China’s food import levels are surprisingly
small for a country with such a large population and a
limited land base. For example, mainland China’s
purchases of food and agricultural imports from the
United States are similar in value to purchases by
Taiwan, Hong Kong, and the Netherlands, places with
much smaller populations. Despite its size, China is
only the seventh-leading destination for U.S. agricultural exports, with sales averaging $1.7 billion per year
during 1995-2000 (fig. A-1). At the end of the 20th
century, China accounted for just 3 percent of world
agricultural trade, was largely self-sufficient in food
production, and was a major exporter of many agricultural items. While China is already a major market, it
has significant potential for increased food imports.
China’s role in world agricultural markets is magnified
by the volatility of its patterns of trade. Since the late
1970s, U.S. agricultural exports to China have
followed a roller coaster pattern as China periodically
buffeted grain and oilseed markets with unexpected
purchases or sales (fig. A-2). Wide year-to-year swings
in China’s agricultural imports add considerable uncer-
Economic Research Service/USDA
This report is an introduction to issues related to
China’s food and agricultural outlook for the 21st
century for policymakers, business analysts,
researchers, and others interested in how the world’s
most populous—and perhaps fastest changing—
country will affect agricultural trade and commodity
markets in the coming decades. A series of brief articles on 13 key issues provides brief background information on each issue, assesses the current state of
knowledge, and asks questions about what might
happen and what we need to know. The articles are
speculative in nature, and may raise as many questions
as they answer. The list of issues covered here is by no
Figure A-1
Average annual U.S. agricultural exports to
leading countries and regions, 1995-2000
Japan
Canada
Mexico
South Korea
China (Taiwan)
Netherlands
China (Mainland)
Hong Kong
Germany
United Kingdom
Egypt
Spain
Russia
Philippines
Indonesia
10.1
6.7
5.4
3.0
2.3
1.8
1.7
1.5
1.2
1.2
1.1
1.0
0.9
0.8
0.5
0
2
4
6
$ billion
8
10
12
Note: Chart shows average value of U.S. total agricultural exports
for years 1995-2000.
Source: Calculated by ERS using data from USDA Foreign
Agricultural Trade of the United States.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 1
vegetable oils will rise the fastest. Consumption of
processed foods, eating out, and concerns about food
quality and safety are becoming more common in
China. The rapidly maturing retail food sector
reflects increasing consumer demand for convenience, quality, and value-added in foods. The increase
in meat consumption may be one of the most important developments in China’s agricultural sector. The
increased demand for feed grains to support a
growing and modernizing livestock industry is likely
to generate increased demand for imports of both
meat and feed grains.
Figure A-2
U.S. agricultural exports to and imports
from China, 1975-2000
$ billion
3.0
2.5
2.0
U.S. exports
to China
1.5
1.0
U.S. imports
from China
0.5
0
1975
78
81
84
87
90
93
96
99
Source: USDA Foreign Agricultural Trade of the United States.
means exhaustive, but the coverage of issues is broad
enough to give the reader a good overview.
Growing Consumption, Limited Resources
China is one of the world’s largest and most volatile
customers for agricultural products. Yet, for a country
of its size and limited resource endowment, China’s
agricultural import levels are modest. China tends to
import bulk commodities and items used as intermediate inputs in labor-intensive manufacturing. China is
a major exporter of high-value products, such as
manufactured foods, animal products, fish, vegetables,
and fruits. While per capita incomes and food expenditures in China are still low, food security is not a
problem for most of the country’s population. Foodconsumption levels have grown and will continue to
grow as the country grows richer, but this growth will
further strain China’s limited land and water resources.
Further domestic production increases will require
more efficient use of agricultural inputs. The transfer
of millions of agricultural workers to nonfarm work is
a key issue that will affect agricultural production and
the welfare of China’s 800 million rural residents.
Meat Consumption May Boost Feed Imports
As China’s consumers grow wealthier and move from
rural to urban areas, purchases of all foods will
increase, but consumption of meats, fish, fruits, and
As exporters prepare to enter the “China market,” it is
important to keep in mind the regional diversity of the
country. Important differences in development level,
living standards, and reliance on trade are evident
between northern and southern China, eastern and
western China, and urban and rural China. These
differences seem to be magnified as rapidly growing
coastal cities pull further ahead of inland cities and
rural areas. Historically, provinces have competed with
one another to develop their local industries, a practice
that dampened interregional trade and encouraged
inefficient industry structure and overcapacity. Greater
competition brought about by the country’s WTO
accession will likely encourage a more integrated
national economy with fewer, more-efficient firms.
The rapid development of China’s transportation and
marketing infrastructure is also playing a role in integrating the national economy. However, transportation
and logistics costs account for an estimated one-fifth
or more of retail prices, much higher than in developed
countries. Marketing costs will need to be reduced to
allow farmers in China’s interior to compete for
markets on China’s coast and overseas. Inadequate
port facilities and lack of warehousing and cold
storage facilities impede both domestic and international trade. Increased competition after the country’s
WTO accession will likely push China’s food
marketing system to squeeze out inefficiencies and
reduce farm-retail margins.
Slow Growth in Agricultural Trade
China’s agricultural trade has grown slowly, especially
in comparison with its booming merchandise trade.
The country’s goal of food self-sufficiency has led
policymakers to restrain imports of land-intensive
grains, the production of which has a high opportunity
cost in land-scarce China. In accordance with its
2 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
membership in the WTO, China will lower tariffs,
weaken state trading monopolies, increase the openness of import license and quota allocation, and
require publication of trade regulations, thus weakening most of the policy instruments the government
has used to restrain agricultural imports. At the same
time, WTO entry may open more markets for China’s
labor-intensive exports, potentially moving China’s
trade patterns in a direction that will make more efficient use of the country’s resource endowment.
From the 1950s through the early 1990s, China taxed
its agricultural sector by procuring commodities at
below-market prices to subsidize urban consumption
and industrial development. During the 1990s, central
government taxation of farmers receded (although
local taxes and fees have become more of a burden for
farmers). In the late 1990s, the government procured
grain at above-market support prices and market prices
of some commodities rose above world prices. As its
control over trade weakens after the country’s WTO
accession, China’s government may look at other
means of protecting and subsidizing farmers to maintain a degree of food self-sufficiency and social
stability. Government subsidies for China’s farmers are
minimal now and both “amber-box” (potentially pricedistorting subsidies) and “green-box” (infrastructure,
education, and other subsidies not tied to prices)
spending could rise considerably while staying within
China’s WTO commitments.
Constraints on Production Growth
Since the 1980s, China’s government has heavily
supported research in biotechnology, including development of high-yielding, insect- and drought-resistant
plant varieties that potentially could allow farmers to
produce more food from China’s limited land area.
However, China now seems to be taking a cautious
approach to biotechnology. Genetically modified (GM)
varieties of most of China’s major crops have been
developed, but only a few have been approved for
commercial use. In 2001, the government published
regulations on labeling of GM foods, which disrupted
imports of soybeans, most of which are grown from
GM seeds in the United States and South America.
The regulations left out details that would determine
the stringency of the regulations, leaving much uncertainty about China’s approach to biotechnology.
Land and water are key agricultural inputs that limit
China’s agricultural production capacity. Indeed, the
Economic Research Service/USDA
current level of use of these inputs may be unsustainable. Surface water supplies have dwindled in much of
northern China, and ground water is being depleted
through heavy agricultural, industrial, and household
use. Environmentally fragile cultivated land is being
returned to forests and grass cover, while some highly
productive agricultural land is being lost to urbanization. Much of China’s economy is now governed by
market forces, but land and water are not. Farmland is
owned collectively by villages, and village leaders
allocate land-use rights to households in their villages.
Land cannot be bought or sold by individual farmers,
and land rentals are relatively uncommon and mostly
informal. The land-tenure system is equitable, but the
lack of land markets impedes the readjustment of land
to its most efficient use. Water is exploited as a
common property resource, and low marginal prices
lead to overuse. The development of improved institutions to manage and allocate scarce land and water
resources will be crucial to expanding China’s agricultural production capacity.
Labor is China’s most abundant resource and roughly
half of the country’s workers are employed in agriculture, where incomes are low. The creation of nonfarm
jobs for China’s large rural population is critical to the
country’s economic development. Job creation will be
a difficult challenge, as many rural and urban
employers will face competitive pressures to cut costs
after China’s WTO entry, thus making employers less
inclined to hire more workers. China will need to
develop credit markets in rural areas and reverse its
historical urban bias in education, technology, and
infrastructure investment to spur development of its
rural hinterland and create new jobs. The easing of
restrictions on rural-urban migration will also be
necessary. Service industries, which tend to concentrate in urban areas, will account for much of China’s
job growth as the economy develops.
Reliable Market Information Needed
Reliable information is needed for analysts to accurately assess China’s development and for markets to
work efficiently. Many market analysts distrust China’s
official statistics, many of which rely on a bureaucratic
bottom-up reporting system set up for a centrally
planned economy. Improvements in China’s statistical
system, including implementation of modern survey
methods and reconciliation of statistics produced by
multiple agencies, will improve the functioning of
markets. It will be equally important to increase trans-
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 3
parency by publishing important numbers, such as
grain and cotton stocks, which are now considered
state secrets.
Questions Abound
The titles of each of the 13 issue articles in this report
are in the form of a question. While the report also
provides a rich source of information, its main purpose
is to encourage speculation and inquiry about the
future path of food and agriculture in China. The
emphasis on questions is especially appropriate for
study of China, since the country’s 20th-century path
took many unexpected twists and turns. Will China
continue on the path toward increased market orientation and global integration, or will the road to reform
be marked by further periodic retrenchments as in the
past? Will the greater transparency and open borders
mandated by China’s WTO commitments reduce the
uncertainty and volatility that characterized its agricultural trade during the 20th century? Will China develop
its economy without leaving its large rural population
behind? The answers to these questions have important
implications not only for China’s development but also
for the smooth functioning of world markets for food
and agricultural products, which affects all nations.
4 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
China at a Glance
A Statistical Overview of China’s
Food and Agriculture
Fred Gale
The United States and China are at very different
stages of development and have quite different resource
endowments that are in many ways complementary.
China has the world’s largest population while the
United States has the world’s largest economy. The
U.S. economy is consumption oriented, with a large
trade deficit. China is investment oriented, accumulating capital through trade surpluses and foreign direct
investment. Many of China’s imports are capital equipment and intermediate inputs, while the United States
imports many consumption-oriented goods. The investment orientation of China is reflected by its high Gross
Domestic Product (GDP) growth rate.
The agricultural outputs and the land areas of the two
countries are similar, but China has a much larger labor
force employed in agriculture and most of its population lives in rural areas (table B-1). Productivity and
income of agricultural laborers in China are accordingly much lower than in the United States. China’s
food share of exports is 6 percent, surprisingly high
(only 2 percentage points less than the land-abundant
United States) for a country with limited land
resources. Its food imports are just 4 percent of
total imports.
Surprisingly Self-Sufficient in Food
For a country with nearly 1.3 billion consumers and
limited natural resources, China’s level of food imports
is surprisingly low. China is nearly self-sufficient in
food and is a major net exporter of many food products, including manufactured food and beverages,
animal products, vegetables, fish and seafood, tea, and
fruits (table B-2). China’s agricultural exports go
primarily to neighboring Asian countries, including
Japan and South Korea, which are also among the top
markets for U.S. agricultural products.
Overall, China is a net importer of bulk commodities,
primarily wheat. In some years, China has been a
major importer of corn and cotton, and in other years,
it has been a major exporter of those commodities.
China is a major exporter of rice. During the 1990s,
Table B-1—China-United States statistical comparison, 1999
Item
Population1
Population growth
Rural share of population
Population density
Gross domestic product (GDP)
GDP per capita
GDP growth
Cultivated land area2
Value of agricultural output3
Agricultural value added per worker
Merchandise exports
Merchandise imports
Food share of exports
Food share of imports
Unit
China
Million
Percent
Percent
Persons per square km
Billion dollars
Dollars
Percent
Million hectares
Billion dollars
Dollars
Billion dollars
Billion dollars
Percent
Percent
1,266
.9
68
134
989
770
7
130
255
325
195
166
6
4
United States
282
1.2
23
30
9,152
30,850
3
174
215
72,000
695
1,059
8
5
1 Data from population censuses, year 2000. 2 Data from agricultural censuses, 1997. U.S. land area is harvested cropland. 3 For China: gross value of
farming and animal husbandry obtained from China Statistical Yearbook; for United States: agricultural sector value added, U.S. Department of Agriculture.
Source: World Bank World Development Indicators, except where noted.
Economic Research Service/USDA
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 5
Table B-2—China exports and imports of agriculturally related items, by category, 1995-2000
Category
Average annual trade, 1995-2000
Imports
Exports
Net exports
Billion dollars
beverages1
Manufactured food and
Animals and animal products2
Vegetables
Fish and seafood
Tobacco, coffee, tea, and spices
Fruits and nuts
Grains, feeds, and milled products3
Oilseeds, fats, and oils
Fiber, fabrics, hides, and skins4
Fertilizers
Other agricultural products
3.5
2.2
1.6
1.9
1.1
.4
1.4
1.3
5.5
.2
.4
.3
.5
.1
.8
.2
.2
2.6
2.9
7.2
2.8
1.2
3.3
1.7
1.5
1.2
.9
.2
-1.3
-1.6
-1.6
-2.6
-.9
1 Baking products, preserved food, beverages. 2 Live animals, meat, dairy, eggs, honey, and other animal products. 3 Cereals, feeds and food waste,
and flour and other milled products. 4 Silk, animal hair, cotton yarn and fabric, and hides and skins.
Source: ERS analysis of China customs statistics reported in Hsin-Hui Hsu and Fred Gale, China: Agriculture in Transition, USDA/ERS Agriculture
and Trade Report WRS-01-2, November 2001, appendix tables 5 and 6.
China emerged as a major market for imports of
oilseeds, vegetable oils, and oil meal.
Figure B-1
China uses most other agriculturally related imports
as intermediate inputs for manufacturing. China uses
imports of fabrics, hides, and skins in its export-oriented
garment, footwear, and leather product industries. Net
imports of fertilizers help boost China’s domestic crop
production, reducing the need for food imports.
$ billion
U.S. agricultural exports to China by
commodity type, 1991-2000
3.0
Cotton
2.5
2.0
Volatility in Bulk Commodity Imports
Much of the volatility in China’s agricultural trade
reflects swings in imports for a few bulk commodities,
especially corn, wheat, and cotton (fig. B-1). U.S.
exports of cotton to China sharply increased in 1994,
and grain and oilseed exports rose in 1995. In subsequent years, U.S. grain exports to China dropped off
dramatically to minimal levels and cotton exports were
minimal in 1999 and 2000. China’s imports of oilseeds
and their products have been more stable, but the
overall stability in the oilseed category masks a policyinduced switch from imports of oils to imports of
unprocessed oilseeds during the 1990s. China’s meat
and other agricultural imports from the United States
have grown at a steadier rate.
Poor, But Not Hungry
China has a rising urban middle class with world-class
consumption standards, but it is still largely a poor
country. Its per capita GDP is similar to those of
developing countries, such as the Philippines and Sri
Grains
and feeds
Oilseeds
and
products
1.5
1.0
Animals
and animals
products
0.5
Other
agricultural
products
0
1991
93
95
97
99
Note: Data are for calendar years.
Source: USDA, Foreign Agricultural Trade of the United States.
Lanka.1 In 2000, China’s urban residents spent an
average of $236 per person on food, and rural expenditures were even lower, at $56. Farm families, which
still make up the bulk of China’s population, grow
much of the food they consume.
1
Source: World Bank Development Indicators, per capita GDP
adjusted for purchasing power parity.
6 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Food insecurity, however, is not a problem for most of
China’s population. China’s per capita food supply,
measured by calories per person per day, was 8 percent
above the world average in 1999 (fig. B-2). Famine
and food insecurity were common in China’s past, but
food consumption and food availability have soared
since economic reforms began in the late 1970s.
Figure B-3
Food consumption shares by food category,
China, world, and United States, 1999
Percent
100
80
Sugar and
sweeteners
Fats & oils
Fish
High Consumption of Grains and Vegetables
70
Meat
Grains (mostly rice and wheat) and vegetables, by
weight, make up about 70 percent of per capita food
consumption in China, a much higher share than in the
United States (fig. B-3). China’s per capita consumption
of grains, vegetables, and fish exceeds the world and
U.S. averages, but China’s consumption of fruits, sugar
and sweeteners, and fats and oils is lower. China’s per
capita meat consumption exceeds the world average but
is less than half that of the United States.
60
90
50
Fruits
40
30
Vegetables
20
10
Grains
0
China
These differences in food consumption between China
and the rest of the world reflect a combination of low
per capita incomes in China and differing tastes and
preferences. As China’s consumers grow wealthier,
consumption of all foods will grow, but consumption
of meat, fruits, fish, fats and oils, and sugar and sweeteners will grow the fastest.
Figure B-2
Food supply—calories per person per day—China,
world, and United States, 1980-99
Calories (1,000)
4.0
3.8
3.6
World
United States
Note: Based on per capita kilograms of consumption.
Source: United Nations Food and Agriculture Organization,
FAOSTAT database.
A Major Producer
China has 10 persons to feed per hectare of arable land
—more than twice the world average of 4.4 persons per
hectare. Yet China has remained largely self-sufficient in
food production and is a major producer of many
important commodities. China’s share of world production exceeds its share of world population for most
major commodities (table B-3). Most notably, China
produces over 40 percent of the world’s pork and
vegetables. China’s low shares of milk, sugar, beef,
soybean, and fruit production reflect its relatively low
consumption levels for these commodities.
United States
3.4
3.2
3.0
China
2.8
World average
2.6
2.4
In contrast with China, the United States is richly
endowed with farmland. While China’s population is
more than four times that of the United States, the
United States has about one-third more cropland than
China. The United States and other land-abundant
countries can potentially relieve the stress on China’s
limited natural resource base by supplying China with
land-intensive food and feed grains, oilseeds, and
meats and poultry.
2.2
Intensive Cultivation
2.0
1980 82
84
86
88
90
92
94
96
Source: United Nations Food and Agriculture Organization,
FAOSTAT database.
Economic Research Service/USDA
98
China maintains its high level of food production by
double- and triple-cropping and applying large quantities of fertilizer and labor to its limited land base.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 7
Table B-3—China and U.S. shares of world population,
land, and production of selected agricultural
commodities, 2000
Item
United
States
China
Percent
Arable cropland
Population
Pork
Vegetables and melons
Eggs
Tobacco
Rice1
Rapeseed
Corn1
Cotton1
Wheat1
Poultry
Fruit
Soybeans1
Beef and veal
Sugar cane
Milk
9
21
47
42
41
35
34
28
21
20
19
19
15
9
9
6
2
13
5
9
6
9
10
2
2
40
19
11
25
7
45
22
3
13
1 Note:
Data from U.S. Department of Agriculture, World Agricultural
Supply and Demand Estimates, market year 1999/00.
Source: United Nations Food and Agriculture Organization, FAOSTAT
database, except where noted.
China’s high consumption and production of vegetables, which yield high quantities per unit of land,
makes efficient use of scarce land resources. Importing
soybeans, which have low yields per hectare, allows
China to free up land for higher yielding crops. Yields
of China’s major crops are above world averages (table
B-4). Fertilizer use per hectare is more than 2.5 times
higher than the world and U.S. averages. China has
over 300 laborers for every 100 hectares of farmland.
China also has a relatively high share of its land irrigated and relatively few tractors.
China’s strained natural resource base and high levels
of fertilizer and pesticide use mean that further expansion of agricultural output through greater input use
may not be sustainable. Water supplies in northern
China are dwindling, and pollution from industrial
effluents and agricultural runoff is worsening. China is
returning environmentally fragile land to more sustainable forest or grass cover, further reducing the availability of arable land. To accommodate growing
consumer demand for food, the agricultural sector will
probably need to make more efficient use of its limited
land and water resources by changing the mix of crops
planted, adopting higher yielding varieties, improving
land management, or consolidating land holdings to
achieve size economies.
China’s farms are small and mostly cultivated by
households. The average household cultivates about
2.5 acres, frequently in multiple noncontiguous plots.
Farmland is owned collectively by villages. Village
leaders allocate land-use rights among village households based on family size and labor availability.
Farmers cannot sell their land, but land rentals occur in
many villages.
Rising Rural-Urban Inequality
Inequality between rural and urban areas in China has
risen markedly in recent years. Incomes and living
standards have advanced most rapidly in coastal cities,
such as Shenzhen, Guangzhou, Shanghai, and Beijing,
where per capita incomes are about twice the urban
average. Some rural areas, such as those in Zhejiang
and Guangdong provinces, have shared in the income
Table B-4—Comparison of agricultural yields and input per hectare of cropland, China and United States, 1997
Item
Unit
China
World
Production per hectare of land:
Rice, paddy
Wheat
Corn
Soybeans
Vegetables and melons
Fertilizer consumption per hectare
Farm workers per 100 hectares1
Land irrigated
Tractors per 1,000 hectares
Tons
Tons
Tons
Tons
Tons
Kilograms
Number
Percent
Number
6.2
3.7
4.6
1.7
18.4
271
310
40
6
3.9
2.7
4.3
2.2
15.7
94
82
18
18
United States
7.0
2.8
8.6
2.6
17.1
111
2
13
27
1For China, farm employment is the sum of those engaged in crop planting, animal husbandry, and agricultural services reported in 1997 agricultural census.
Other employment figures from FAOSTAT.
Source: Estimated from United Nations Food and Agriculture Organization, FAOSTAT database.
8 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
an exodus of labor from farms to factory and service
jobs similar to the labor shift in the United States in
the mid-20th century but on a much larger scale. The
rural-urban income gap will be a consideration in farm
and rural policy decisions as the country’s leadership
seeks to maintain social order and preserve its support
among the rural populace.
Figure B-4
Annual per capita income in China, selected
cities and rural provincial averages, 2000
Shenzhen
20,240
Guangzhou
13,967
Shanghai
11,718
Beijing
10,349
Urban average
Further Reading
6,280
Rural Zhejiang
Hsu, Hsin-Hui, and Fred Gale (coords.). China: Agriculture in Transition, U.S. Department of Agriculture, Economic Research Service, Agriculture and
Trade Report WRS-01-2, November 2001.
4,254
Rural Guangdong
3,654
Rural average
2,253
Rural Henan
1,986
Rural Shaanxi
1,444
Rural Guizhou
1,374
0
5
10
15
Yuan (1,000)
20
Huang, Jikun, Scott Rozelle, and Mark W. Rosegrant.
“China’s Food Economy to the Twenty-First Century: Supply, Demand and Trade,” Economic Development and Cultural Change, 1999, pp. 737-766.
25
Lu, Feng. “Grain Versus Food: A Hidden Issue in
China’s Food Policy Debate,” World Development,
26, 1998, pp. 1641-1652.
Note: 1 dollar = 8.28 yuan.
Source: China and Guangdong statistical yearbooks.
growth, but most of rural China has experienced much
slower income growth. About 800 million of China’s
1.3 billion people live in rural villages, where per
capita incomes are less than 40 percent of the urban
average. With about three workers for every hectare of
farmland, farming in China is highly labor intensive
and income per worker is low. China is expected to see
Economic Research Service/USDA
Nyberg, Albert, and Scott Rozelle. Accelerating
China’s Rural Transformation, World Bank, 1999.
U.S. Department of Agriculture, Economic Research
Service. “China Briefing Room,”
http://www.ers.usda.gov/briefing/china/
Western Coordinating Committee (WC-101). “Publications,” http://www.china.wsu.edu/publications.htm
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 9
How Will Rising Income Affect
the Structure of Food Demand?
Hsin-Hui Hsu, Wen S. Chern, and Fred Gale
As China has over one-fifth of the world’s consumers
and an economy growing at 7-8 percent annually, the
country’s rising consumption of food has the potential
to significantly impact world food demand. In past
decades, policymakers in China were concerned
primarily with supplying enough grain to meet basic
nutritional needs of China’s huge population. Now,
however, the emphasis is shifting from quantity of
food demanded to the changing composition of food
demand. Strong income growth and rapid urbanization
are diversifying the Chinese diet and creating demands
for high-value and specialty food products.
Population Growth Slowing
With the world’s largest population (nearly 1.3 billion
in 2000), China plays an important role in world food
demand. U.S. Census Bureau projections show that
China may add another 100 million consumers
between 2000 and 2010. In future decades, however,
population growth will diminish due to the rapid
decline in birth rates stemming from population
control policies implemented by the government in the
1970s. The Census Bureau projects that China’s population will peak near 1.5 billion and begin to decline
between 2030 and 2040. As population growth slows,
China’s population will age rapidly. The need to
support the growing retired population may increase
savings rates but slow future growth in disposable
income. In Japan, research has found that seniors
consume more rice, fruits and vegetables, while
younger generations consume more beef and beer
(Regmi; Mori). Similar generational differences may
also affect China’s food consumption.
Urban Diets: More Meat, Less Grain
Most of China’s population still lives on farms in rural
villages, where they grow much of their own food and
have less access to markets, stores, processed foods,
and refrigeration. Grain is the major component of the
rural diet, and households grow much of it themselves.
In 1999, rural Chinese households consumed an
average of 247 kg of grain per person and purchased
only 42 kg. In 2000, rural per capita food spending
was just 464 yuan ($56) annually, compared with
1,958 yuan ($236) for urban residents. The difference
reflects lower incomes and more self-production of
food in rural areas, as well as less eating out in restaurants and fewer purchases of processed foods.
Purchases of perishable foods in rural areas are limited
by access to refrigeration. Only 12 percent of rural
households had a refrigerator in 2000.
China is expected to undergo mass urbanization during
the 21st century, which could have dramatic effects on
food consumption. According to China’s population
census, only 36 percent of the population lived in
cities and towns in 2000. This urbanization rate was 10
percentage points below the world average and lower
than the rate in many other countries at similar development levels. China’s policymakers are placing a
high priority on urbanization, and analysts project a
50-percent urban population share by 2020. Assuming
total population growth of 15 percent from 2000 to
2020, a rise in China’s urban population share from 36
to 50 percent would mean an increase in urban population of 270 million.
When people move to cities or towns, they tend to
consume more meat, processed foods, and restaurant
meals, and less grain. In 2000, China’s household
surveys showed that per capita red meat consumption
in urban areas was 40 percent higher than in rural
areas. Per capita fish consumption in urban areas was
3 times higher, and egg and poultry consumption was
more than 2.5 times higher than in rural areas. Urban
per capita grain consumption was only one-third the
rural average. Urban residents are more likely to shop
in modern supermarkets and frequently patronize
restaurants. Rising living standards in urban areas are
boosting demand for high-quality grain, meats, and
processed foods. Imports of fragrant rice, quality
wheat for breads and cake mixes, special cuts of meat,
and palm oil for instant noodles are in high demand by
the urban market segment.
10 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
A hypothetical calculation shows how a higher urban
population share in China could slow the growth in
food grain consumption and speed up growth in
demand for meats and fish. If China’s total population
remained constant, but its rate of urbanization
increased from 36 to 50 percent, China’s total food
grain (rice and wheat) consumption would be 12
percent lower (table C-1). Red meat consumption
would rise 5 percent if urbanization rose to 50 percent,
while poultry and egg consumption would rise 14
percent and fish consumption would rise 16 percent.
Consumption of vegetables and edible oils would be
relatively unaffected since urban and rural consumption levels are similar.
Rising Living Standards
Within the urban market segment in China, incomes
vary greatly. An emerging middle class of relatively
high-income consumers is based largely in Beijing,
Shanghai, Guangzhou, Shenzhen, and other wealthy
coastal cities. Other urban residents, including many
residents of inland cities, the unemployed, and
growing numbers of migrants from rural areas and
retirees, have much lower incomes. High-income
urban residents consume more of most foods on a per
capita basis, especially milk, fruit, beer, poultry, meat,
fish, eggs, and vegetables (table C-2). Consumption of
grains and fats and oils is similar for high- and lowincome urban residents.
Table C-1—Estimated China food consumption for
alternative urbanization rates, selected food items, 2000
Food item
Food grains
Vegetables
Edible oils
Pork, beef, mutton
Poultry
Eggs
Fish
Urbanization rate
36 percent
50 percent
— Million tons —
239.1
209.5
139.1
140.5
9.3
9.5
20.5
21.5
5.6
6.5
9.3
10.6
8.5
9.9
Consumption
change
Percent
-12
1
2
5
14
14
16
Note: Total consumption estimated as the product of per capita consumption and population. Urban and rural totals computed separately then
summed to obtain a national total. The “36 percent” column uses the population totals from China’s 2000 census, which reported 36 percent urban
population. The “50 percent” column assumes the urban population is 50
percent of the total 2000 population. Derived demand for feed grains is not
included in the table.
Source: ERS calculations using data from China National Bureau of Statistics, China Statistical Yearbook 2001.
Economic Research Service/USDA
Table C-2—Major food items purchased by high- and
low-income urban residents, 1999
Items
Rice
Wheat flour
Breads, fine grain
products
Coarse grains
Oils and fats
Vegetables
Fruits
Pork
Beef
Mutton
Poultry meat
Fish and shrimp
Milk, fresh
Eggs
Sugar
Beer
Residents
Low-income High-income
— Kilograms —
49.0
47.0
19.9
16.3
13.6
2.3
7.9
99.4
32.8
13.4
1.2
0.7
3.2
3.9
3.1
9.3
1.7
3.8
19.7
3.7
8.2
133.9
72.0
19.6
2.3
2.0
6.1
6.3
12.4
13.2
1.9
7.6
Ratio of
purchases1
Percent
0.96
0.82
1.45
1.60
1.05
1.35
2.19
1.47
1.88
2.77
1.89
1.63
3.98
1.42
1.17
2.03
Note: High- and low-income groups were defined as the average of the
highest and lowest two income classes, respectively, of the existing eight
income categories.
1Ratio of high-income to low-income average.
Source: China National Bureau of Statistics, Urban Household Survey, 2000.
Income growth may affect both the quantity and the
mix of foods demanded in China. Demand analysis
indicates that both rural and urban residents in China
increase their purchases of all major food items as
their incomes grow while holding prices constant. For
most food items, the growth in demand is slower than
the growth in income, as consumers tend to save or
spend their income gains on nonfood items. Thus, the
share of expenditures devoted to food tends to fall as
incomes rise.
Income elasticities estimated by Chern illustrate how
the response to income varies across food items (table
C-3). China’s urban residents increase their purchases
of fish, poultry, and pork at rates faster than their
growth in income. Some studies have concluded that
grain is an inferior good, but Chern’s estimates indicate that consumers increase grain purchases, although
at a slow rate, as incomes rise.1 Rural residents also
increase their purchases of all items as their incomes
rise, but the increase in purchases is proportionately
1 An inferior good is one whose demand falls when consumer
income rises.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 11
Table C-3—Estimated income and price elasticities
in China
Item
Fish
Poultry
Pork
Beef and mutton
Eggs
Vegetable oil
Vegetables
Fruit
Grain
Income
elasticities
Urban1
Rural2
3.41
3.12
1.68
NA
.55
.38
.20
.21
.11
.95
.70
.67
.65
.41
.34
.36
.62
.32
What We Need to Know
Price
elasticities
Urban1
Rural2
-.67
-1.28
-1.59
NA
-1.81
-.41
-.43
-.88
-.16
How does the joint nature of farmers’ production
and consumption decisions alter conventional
approaches to market analysis? How much farm
grain production enters commercial channels?
-.35
-.50
-.66
-.38
-.91
-.58
-.48
-.94
-.37
Note: NA = not available.
1 Based on pooled provincial-level data from 30 cities and provinces,
1993-96.
2Based on rural household survey data from Jiangsu province
(976 households) in 1994.
Source: Chern, 2000.
less than the increase in income. For rural households,
the largest increases occur for fish, poultry, pork, beef
and mutton, and fruit.
Sensitive to Price Changes
As China integrates with the world economy, some
food prices in China could rise while others fall. Price
elasticities of demand indicate that China’s consumers
are sensitive to food prices, suggesting that realignments of prices could have important effects on food
demand. Urban consumers are especially sensitive to
prices of pork, poultry, and eggs. Effects of changing
prices could offset or reinforce effects of income
growth. If, for example, meat prices were to rise after
China’s World Trade Organization accession, the price
effect might slow the growth in meat demand stimulated by rising income.
Rural consumers still make up the majority of China’s
population, and more information is needed about their
complex, interrelated production and consumption
responses to price changes. For example, rural
consumers both grow and consume grain. Thus, an
increase in grain prices would not only increase a rural
household’s cost of consuming grain but also increase
the household’s income and incentive to produce grain.
A higher grain price could induce more production and
possibly more on-farm consumption. Households also
hold substantial on-farm grain stocks, and price
changes can induce households to sell off or add to
their stocks.
How will increases in away-from-home food
consumption and the aging of the population
affect the mix of foods demanded? Does the aging
of the population offset some of the consumption
effects of income growth and urbanization?
Will consumers accept genetically modified food
products? What quality attributes will consumers
demand in foods?
Demand for Food Attributes Unknown
Little is known about how China’s consumers will
respond to newly developed food items and product
ingredients, such as genetically modified foods, which
could play an important role in China’s future consumption and trade. Also, Chinese consumers may become
more health conscious and pay more attention to food
safety issues because the application of agricultural
chemicals is poorly regulated in China and industrial
pollutants are common in the soil, water, and air.
Market analysts and policymakers need to know how
much Chinese consumers are willing to pay for foods
with specific attributes, such as high-quality ingredients,
nutrition content, or brand names. Chinese consumers’
willingness to pay for food attributes has implications
for labeling policies for genetically modified foods and
the viability of costly, identity-preserved food marketing
and “green” and “organic” production methods.
China’s consumption statistics are becoming less
useful because they were designed to measure at-home
consumption of basic commodities (see “China’s
Statistics: Are They Reliable?” in this report). Chinese
consumers are eating more meals in restaurants, cafeterias, and dining halls, and these meals are not
captured in consumption surveys. Statistics probably
understate urban consumption of foods that are
consumed away from home. Chinese consumers now
differentiate rice and wheat according to quality and
attributes, including stickiness, fragrance, and gluten
and protein content, with widely varying prices. While
the broad category of rice may have a low income
elasticity, high-quality rice may have a high elasticity,
12 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Mori, Hiroshi (ed.). Cohort Analysis of Japanese Food
Consumption—New and Old Generations, Senshu
University Press, Japan, 2001.
but this effect cannot be investigated with current
statistics that do not differentiate among types of rice.
Further Reading
Chern, Wen S. “Assessment of Demand Factors Affecting Global Food Security,” Food Security in Asia:
Economics and Policies, W.S. Chern, C.A. Carter,
and S.Y. Shei (eds.), Edward Elgar, 2000.
Ehui, Simeon, Thomas Hertel, Allan Rae, and Alejandro Nin. “China: Will They Buy or Sell?” Choices,
Third Quarter, 2000.
Economic Research Service/USDA
Regmi, Anita (ed.). Changing Structure of Global
Food Consumption and Trade, Agriculture and
Trade Report WRS-01-1, U.S. Department of Agriculture, Economic Research Service, May 2001.
Wu, Yanrui. China’s Consumer Revolution: The
Emerging Patterns of Wealth and Expenditure,
Edward Elgar, 1999.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 13
A Maturing Retail Sector:
Wider Channels for Food Imports?
Brad Gilmour1 and Fred Gale
China’s retail food sector has matured rapidly, as
consumers have increased their demand for convenience
and quality in food products. A highly competitive food
retail sector has emerged, featuring modern supermarket
chains, wider choice in products, and branded items.
The continuing evolution of China’s retail sector has
important implications for how foreign and domestic
food products reach the consumer. Producers—whether
domestic or foreign—seeking to gain access to China’s
consumers must navigate the country’s complex food
distribution system.
From the 1950s through the 1970s, Chinese government entities procured, distributed, and sold nearly all
agricultural commodities. In the early 1980s, there was
little value-added in the country’s food system.
Processed foods were limited, as most households
prepared meals from rice, noodles, raw produce, and
meat. Service and hygiene in food retail outlets were
poor, and food distribution systems were inefficient.
Following the implementation of economic reforms in
the late 1970s, food marketing was one of the first
sectors in China to be privatized and directed by
markets (table D-1). Producers were permitted to sell
grain, produce, and meat to consumers in urban
farmers’ markets. Small food stores, kiosks, and
restaurants sprang up, and by the late 1980s, department stores were offering large food sections. Food
processing output value in China reportedly grew at a
14-percent annual rate through the 1980s and 1990s
(China Food and Agricultural Services). Away-fromhome food spending was 15 percent of urban food
expenditures in 2000, up from negligible amounts in
the 1980s. Many different players entered the food
retail sector, including small individual entrepreneurs,
state-run companies and their privatized spinoffs, and
prominent foreign-invested ventures.
1
The views expressed in this article are those of the author and
do not necessarily reflect the views of Agriculture and Agri-food
Canada.
New Formats Transform Food Retailing
China’s food retail sector was transformed dramatically during the 1990s by the rapid rise of supermarkets, including large domestic chains, such as Lianhua,
Hualian, and Nong-gong-shang. Several foreign supermarket operators based in Japan, the Netherlands, and
Hong Kong entered the China market, but most pulled
out or reduced their presence as they found it difficult
to compete with domestic firms. Margins in the
fiercely competitive food retailing sector are very thin,
and Chinese consumers are said to be highly pricesensitive. Numerous domestic competitors often
received “soft” bank loans, reduced property rents, and
the advantages of good personal relationships with
distributors. At the same time, foreign entrants were at
a disadvantage in coping with central, provincial, and
municipal bureaucracies that sought to protect vested
interests and support local retailers as a means of
creating jobs for local workers. Independent domestic
standalone supermarkets were also forced out of business or acquired by larger state-held chains.
More recently, supermarkets in China have been
upstaged by foreign hypermarket retailers that offer
low prices and an array of goods and services under
one roof. These “hypermarkets” have extensive dry
goods and frozen goods sections, fresh and frozen
meat and seafood, prepared foods, and foodservice
counters. They also include restaurants, fashion and
sporting goods outlets, and other specialty shops.
Many analysts predicted that hypermarkets would fail
because Chinese consumers seldom shop for large
quantities of goods and lack automobiles to carry
home large purchases. However, hypermarkets won
shoppers over by offering convenience, comfort, and
low prices.
Hypermarkets keep prices low through efficient supply
chain management. The food distribution system used
by supermarkets and other food retailers in China still
has much inefficiency. Numerous layers of distributors
exist between the manufacturer/importer and the
14 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Table D-1—Description of retail food outlets in China
Type of outlet
Typical product lines
Procurement methods
Operated by
chains1
Percent
Average outlets
per city1
Number
Hypermarkets
Full line of fresh, frozen,
and ready-to-eat foods,
nonfood items, and services.
Establish direct links
with manufacturers and importers.
90
90
Supermarkets
Full line of fresh and frozen
foods, and nonfood items.
Work closely with local distributors.
75
1,200
Department stores
Packaged items and frozen
foods. Usually one floor of a
multistory retail space.
Use outdated purchasing systems.
50
40
Foodstuff stores
Packaged items.
Use informal, low-tech management
and purchasing processes.
0
20
Convenience stores
Limited line of snacks,
drinks and packaged items.
Tap into supermarket networks.
Foreign-owned stores establish
own distribution networks.
65
1,600
“Mom and pop” stores
Basic consumer products.
Buy from wholesale markets in
small quantities.
0
30,000
Farmers’ markets
Fresh vegetables, fruit,
meat, and seafood.
Buy from local farms.
0
50
1
Estimated average for a major city, such as Beijing, Shanghai, or Guangzhou.
Source: Moustakerski, Peter, and L. Brabant. People’s Republic of China Retail Food Sector Report. U.S. Department of Agriculture, Foreign Agricultural
Service, GAIN Report CH1810, November 2001.
retailer. Each layer receives a markup, relationships
with the distributors are often as important as salesmanship, and most distribution is localized.
Hypermarkets reduce distribution markups by
purchasing goods directly from manufacturers and
large distributors. Hypermarkets have also introduced
modern store management and purchasing methods that
are new to China. While most retail procurement in
China tends to be localized, hypermarkets have sought
to establish national distribution networks.
Hypermarkets have also been able to keep prices low
by supplementing their sales revenues with high listing,
or slotting, fees paid by suppliers eager to place their
products in these fashionable stores.
Greater Efficiency in Food Distribution
Hypermarkets have captured only a small share of the
national market, primarily in wealthy coastal cities.
The effect of hypermarkets on the China market,
however, may be much wider, as domestic chains
respond to the success of these stores. Just as the
competitive threat of foreign supermarket chains in the
1990s led to improved customer service in domestic
chain stores, the competition from hypermarkets may
lead to even more choices for consumers in domestic
stores and stimulate improvements in the efficiency
Economic Research Service/USDA
and openness of the food distribution system. China’s
major chains are increasing services offered to
consumers, offering more fresh produce, and
improving the efficiency of supply chain management
to counter the success of the foreign hypermarkets.
Domestic chains also have announced plans to expand
into the hypermarket format.
The trend in China toward hypermarkets is paralleled by
growth in smaller convenience food stores, which seem
to complement hypermarkets. Convenience stores have
captured the market for sales of small purchase items,
such as drinks, packaged foods, snacks, and ready-to-eat
foods. Foreign-invested chains popularized the format,
but many convenience stores in China are now operated
or franchised by well-known domestic chains. Similar
to hypermarkets, convenience stores maintain their own
warehouses and truck networks or tap into supermarket
distribution networks of parent companies. Competitors
of convenience stores—smaller local supermarkets,
department stores, small foodstuff stores, “mom-andpop” stores, and food kiosks—rely on less-efficient
distribution systems.
Deeper Penetration for Imports
The development of the food retail sector may be an
important factor in opening the China market to
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 15
What We Need to Know
Will efficient supply chain management practices
be widely adopted by domestic retailers?
Will a streamlined distribution system allow highvalue imports to gain wider penetration of the
China market?
How will the evolution of food retailing affect the
structure of food production and processing in
China?
What market penetration strategies will be
successful as China’s retail and distribution
systems mature and Chinese consumers become
more sophisticated?
imports of food and agricultural products, especially
high-value items. Imported items are not common in
domestic supermarkets and are rare in smaller food
retailers. These retail outlets tend to procure products
locally due to China’s poor distribution system and a
tendency for local governments to encourage local
procurement to protect local producers or manufacturers. Imported items have a more substantial presence in hypermarkets, although even in these stores
imports constitute no more than 5 percent of the stock.
Nevertheless, the streamlining of distribution channels
brought about by hypermarkets is likely to make it
easier for imported food items to reach Chinese
consumers. China’s World Trade Organization accession commitments are expected to make it easier to
distribute imported goods within the country and may
enable imports and foreign retailers, currently concentrated in a few large coastal cities, to penetrate smaller
cities and interior provinces.
Effects on Producers
The maturing of the retail sector in China is also
beginning to affect the way food is produced at the
farm level. Foreign-invested retailers, processors, and
chain restaurants have sourced most of their produce,
meat, and other raw materials in China, but they have
had difficulty obtaining reliable supplies of standardized quality products from China’s traditional system
of small household farms geared toward producing
food for home consumption. To keep pace with the
demands of buyers, farms will have to adjust by
specializing in a particular commodity, consolidating
fragmented land holdings to achieve scale economies,
and forging stronger links with processors and
retailers. Closer relationships between firms at
different stages of production and marketing are
emerging as larger commercialized farm operations
grow produce and animals under contract for processors, retailers, or exporters. This trend is likely to
continue and may profoundly alter the way food is
produced in China.
Further Reading
China Food and Agricultural Services. People’s
Republic of China Food Processing Sector Report
2001, report prepared for U.S. Department of Agriculture, Foreign Agricultural Service, ATO-Shanghai, December 2001.
Moustakerski, Peter, and L. Brabant. People’s Republic
of China Retail Food Sector Report. U.S. Department of Agriculture, Foreign Agricultural Service,
GAIN Report CH1810, November 2001,
http://www.fas.usda.gov/gainfiles/200111/
130682605.pdf
16 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Rising Demand for Meat:
Who Will Feed China’s Hogs?
Frank Fuller, Francis Tuan, and Eric Wailes
As China has continued to develop and per capita
incomes of its consumers have risen, dietary patterns
have shifted away from staple grains and starches
toward animal proteins and fish (see "How Will Rising
Income Affect the Structure of Food Demand?" in this
report). Based on survey data collected by China's
National Bureau of Statistics, per capita meat and egg
consumption (not including away-from-home meat
consumption) by urban residents increased an average
of 1.5 percent annually from 1985 to 1999. Rural meat
consumption grew at nearly double the rate of urban
meat consumption, averaging 2.7 percent annually
(fig. E-1). Despite some closing of the gap between
urban and rural meat consumption, on a per capita
basis, urban residents still consumed 70 percent more
meat and eggs in 1999 than rural residents, revealing
the great potential for consumption growth in China in
the coming years. Continued income growth and
urbanization will further expand meat consumption.
Figure E-1
Per capita meat and egg consumption, rural
and urban China, 1985 and 1999
Kilograms
50
1985
1999
40
30
20
10
0
Urban China
Source: China Statistical Yearbooks.
Economic Research Service/USDA
Rural China
Changing Structure of Livestock Production
China's dramatic increase in animal protein consumption would not have been possible without a rapid
expansion of its domestic livestock industry. Since
1985, China's pork output has increased markedly,
reaching over 40 mmt (4.7 times the level in the
United States) in 2000. China's beef sector has grown
from an inconsequential output level in the 1980s to
the third largest in the world. Likewise, China has
moved into second place behind the United States in
total output of poultry meat. Overall per capita meat
consumption in China, however, is still lower than in
the United States.
Most of China's livestock are still raised by traditional
rural households that devote the bulk of their labor to
crop production. Households generally keep livestock
to provide food for the family, draft power, and
manure for fertilizer. Since market reforms took hold
in the 1980s, an increasing number of traditional
households in China have taken advantage of
expanded marketing opportunities to raise additional
animals for sale in local markets. Many households
shifted their focus from crop production to livestock
and increased their swine herds from 1 or 2 head per
household to 10, 50, or 100 head. Large-scale
commercial operations, typically located near urban
population centers, have also increased since the
1980s, encouraged by growing applications of
imported technologies and management practices.
Since 1985, the share of China's pork produced by
traditional households has declined from 95 percent to
less than 80 percent. While livestock production was
traditionally a sideline activity for farm households,
more farms are now specializing in livestock production. Households that specialize in livestock production and large commercial operations have risen in
share of overall livestock production in China to
roughly 15 and 5 percent, respectively.
This transition in livestock production will continue in
the next decade and will have important impacts on
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 17
feed use in China. Traditional household operations
make full use of readily available, low-cost feedstuffs,
often feeding their swine large quantities of water
plants, vegetables, tubers, crop residue, table scraps,
and wheat and rice bran. These low-quality feeds are
supplemented with some grain, protein meals, and
concentrates, but traditional swine diets are often deficient in protein and energy, causing low productivity.
Specialized household producers often employ more
advanced management and breeding practices and feed
their livestock more grain and protein meal.
Specialized household swine producers use roughly 36
percent more grain, compound feeds, oilseed meals,
and premix additives than traditional households. As a
result, specialized households reduce the time it takes
for swine to reach slaughtered weight by 30-80 days.
The shift from traditional households to specializedhousehold and commercial operations has increased
the demand for quality grain-and-oilseed-based feeds,
reinforcing the growth in the number of Chinese feed
mills in the 1990s.
Meat Versus Feed Grain Imports
Land scarcity limits China's ability to continue
increasing its livestock production to meet the growing
domestic demand without increasing its imports of
livestock feedstuffs. An expected relative shift in
production from pork to more-efficient poultry will
improve overall feed conversion, but other challenges
will remain.
The development of specialized household and
commercial livestock operations was facilitated by
government policies that encouraged local and
regional investment in improving livestock genetics,
management practices, disease control, and slaughtering and processing facilities. In the last few years,
however, the central government has increasingly
placed the financial burden of these programs on local
and provincial governments, which have had only
limited success in replacing lost funding. Traditional
and specialized household producers that depend on
subsidized artificial insemination and vaccinations for
livestock may be the hardest hit by the reduction in
central government support, while commercial operations with ties to local government or international
companies may feel less impact from the changes.
Large commercial operations face other challenges.
These facilities are often located near major urban
areas and, accordingly, must deal with issues related to
What We Need to Know
How will China's entry into the WTO affect the
structure of livestock production and marketing in
China?
How rapidly will China's livestock industry
continue to shift from traditional household
production?
What impacts will the rapid rise of supermarkets
have on urban meat consumption and meat
marketing?
How will China's biotechnology product policy
affect future U.S. feed grain (particularly
soybeans) exports?
Will China be a competitive exporter of meat
products to Asia in the future?
waste and odor management. Commercial meat
companies sell a growing share of their output to chain
stores, supermarkets, and foodservice outlets to
capture a quality premium. China lacks a well-developed, independent meat distribution industry; thus,
commercial firms must develop and maintain their
own transportation, storage, and distribution networks.
Several commercial meat companies export relatively
small quantities of meat products to Japan, Singapore,
Russia, and other Asian and Middle Eastern countries,
but exporters must overcome difficulties associated
with meeting international inspection and quarantine
standards to further expand their overseas markets.
With greater exposure to international competition in
the foodservice industry, supermarkets, and export
markets, large commercial operations will feel most
acutely the impacts of increased competition in the
livestock sector brought about by China's entry to the
World Trade Organization (WTO).
As domestic demand for livestock products grows in
the coming years, China will continue to increase both
its own meat production and its imports of meat products. Low per capita incomes and consumer preferences for freshly slaughtered meat currently limit the
potential market for meat imports to low-value cuts
and variety meats. However, rapidly increasing
incomes in large cities and the growing popularity of
supermarkets are likely to generate future opportunities for imports of high-value cuts.
18 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Finally, most of China's growing demand for livestock
products will be supplied by domestic producers,
predominantly specialized households, and commercial livestock operations. These farms, however, will
have to increasingly rely on imported corn and
soybeans or soymeal to feed their growing livestock
numbers because arable land is scarce in China and the
country's capacity to expand land-intensive feed grain
crops is limited. China's uncertain direction in biotechnology policy could limit feed grain imports, since the
United States and other suppliers make wide use of
genetically modified varieties of feed grains and
oilseeds. If China imposes stringent labeling or traceability requirements that apply to feed grains and feed
products, it will raise feed costs to China's livestock
producers and slow the sector's growth.
Further Reading
Brown, Lester. Who Will Feed China?: Wake-up Call
for a Small Planet, W.W. Norton & Company, 1995.
Chao, F., and R. Bean. "MOA Assesses the Impact of
Biotech Regulation 2001," GAIN Report No. CH1028,
U.S. Department of Agriculture, Foreign Agricultural
Service, June 2001.
Fang, C., F. Fuller, M. Lopez, and F. Tuan. "Livestock
Production Slowly Evolving From Sideline to
Principal Occupation," China, Situation and Outlook
Series, International Agriculture and Trade Report
WRS-99-4, U.S. Department of Agriculture, Economic
Research Service, March 2000.
Hayes, Dermot. "China's Role in World Livestock and
Feed Grain Markets," Choices, First Quarter 1999, pp.
25-28.
Economic Research Service/USDA
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 19
Regions in China:
One Market or Many?
Fred Gale
The statement "Everything is true somewhere in China"
reflects the diversity among China's provinces and
regions, each of which has its own character, consumer
tastes, and agricultural growing conditions (see box).
Differences in the level and pace of development and
region-specific policies magnify the importance of
understanding regional differences in China.
Figure F-1
Urban per capita disposable income,
by region, 1990-2000
Yuan (1,000)
10
1990
2000
8
Post-reform development in China led to widening
regional disparities in incomes—east versus west and
rural versus urban. Early post-1978 development policies
favored coastal areas, a reversal of earlier policies aimed
at moving industry inland. Coastal growth accelerated
due to favorable treatment combined with the natural
advantages of coastal locations and ethnic connections
with overseas Chinese investors. Incomes in other
regions also experienced rapid growth, but incomes in
coastal regions remained far ahead. By 2000, urban per
capita incomes in southern coastal provinces averaged
8,541 yuan, while average incomes in other regions
ranged from 5,064 yuan to 5,753 yuan (fig. F-1). The
gap between rural and urban incomes also grew, especially during the 1990s (see "Can Rural Income Growth
Accelerate?" in this report). China's economic
growth—and growth in consumer demand—has been
concentrated in cities along the coast. Provinces along
China's southern coast account for 34 percent of China's
gross domestic product and 21 percent of the country's
population (fig. F-2 and table F-1). With just 10 percent
of the country's cultivated land, China's south coast
region must rely on other regions to help supply its food
needs. Cities along China's northern coast, such as
Beijing, Tianjin, Dalian, and Qingdao, are also
geographic centers of consumer demand.
Coastal cities also account for much of China's
consumption of imported high-value food products. In
some sectors, producers in China's interior provinces
compete with producers overseas for markets along
China's coast. Until recent years, an overloaded transportation infrastructure, especially on north-south
routes, and inefficient marketing systems made interregional trade difficult (see "Transportation and
6
4
2
0
South Coast North South Central Northeast
West
Note: Year 2000 constant yuan. 1990 data were adjusted for
inflation using consumer price index. Weighted averages
computed using provincial population as weights. Regional
delineation by ERS (see fig. f-2).
Source: Calculated by ERS using data from National Bureau
of Statistics.
Distribution: Will Bottlenecks Be Eliminated?" in this
report). Southern feed mills and soybean crushers have
relied on imported raw materials because access to corn
and soybeans from northeastern China is difficult. If
China can reduce transportation and distribution bottlenecks, it will become easier for domestic producers in
interior provinces to supply coastal markets.
Legacy of Regional Self-Sufficiency
At times, uneven development across provinces and
competing economic interests pitted provinces against
one another and dampened interregional trade. China
has, through much of its history, resembled a confederation of separate principalities, a tendency reinforced
by 1950s-era policies that encouraged provinces to be
20 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Important Regional Differences
It is important to understand the vast differences in
resource endowments, climate, and wealth among
China's regions.
Most affected by water scarcity
Heavily populated
Important region for temperate crops: wheat, fruit,
corn, cotton
Northeast
Highest endowment of cropland per capita
West
Important region for soybean and corn production
Largely arid climate
Important center of state-owned heavy industry
Large minority populations
South central
Important cotton production area (Xinjiang)
Site of the Yangtze (Changjiang) River
South coast
Poor and heavily populated
Rapid economic growth and high incomes
Important region for production of rice and pork
Scarcity of land
Relatively high demand for food imports
Northern plain
Site of the Yellow River
self-sufficient in food and industry. Following
economic reforms, lack of economic integration
among provinces came into focus in the 1980s and
1990s when interior provinces tried to block shipments
of manufactured goods from coastal provinces and
tried to prevent raw materials like coal, cotton, jute,
silkworm cocoons, and tobacco from leaving the
province. Interior provinces sought to generate profits
and tax revenue by setting up local industries to
process local raw materials procured at artificially low
prices. In the early 1990s, some observers predicted
that China might break apart under the pressure of
interprovincial trade wars. Until recent years, interprovincial flows of labor and capital were also limited
by restrictions on migration and poorly developed
financial institutions.
China's legacy of local self-sufficiency is slowly
being undone as industries restructure in today's more
competitive environment. By the late 1990s, domestic
trade wars were over and interregional trade was
booming. China's growing trucking industry and
improved highway system have enabled distributors to
bypass bottlenecks in the country's inadequate rail and
water transport infrastructure. Vastly improved
communications systems permit the rapid dissemination of market information and communication
between customers and suppliers.
Greater competition and freer entry may accelerate the
restructuring of China's industry and the emergence of
Economic Research Service/USDA
national, rather than regional, markets. Few national
food brands have emerged, as regional brands and
companies still dominate most markets, but certain
foreign brands are recognized throughout the country.
Greater competition from foreign brands, increased
presence of foreign retailers, and development of
national retail chains may encourage development of
national brands in China. Industries made up of
duplicative small companies associated with particular
provinces, cities, or regions are being restructured to
achieve economies of scale and reduce overcapacity.
Restructuring is expected to intensify as competition
from foreign firms increases. China's WTO accession
commitments, in addition to allowing entry of more
foreign firms, may also allow domestic firms to enter
markets in provinces outside their home regions. This
policy change may accelerate integration of the
national economy in China.
In agriculture, markets are becoming more integrated
and regional crop specialization is increasing. For
example, until the 1980s, each city in China was
expected to be self-sufficient in vegetables, but
production is now concentrating in certain rural areas
that specialize in vegetables and ship them to distant
cities or overseas. Studies show that prices of similar
commodities in different geographic markets move
together, a further indication of market integration.
Greater regional specialization may increase China's
total food and fiber production capacity by making the
most efficient use of the country's scarce farmland.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 21
Figure F-2
Regions of China
Northeast
Xinjiang Uygur
Autonomous Region
Heilongjiang
West
Beijing
Gansu
Inner
Mongolia
Jilin
Liaoning
Hebei
Tianjin
Shanxi
Ningxia
North
Qinghai
Shandong
Shaanxi Henan
Jiangsu
Anhui
Sichuan
Tibet (Xizang)
Autonomous Region
Chong
qing
Shanghai
Hubei
Zhejiang
Guizhou
Hunan
Jiangxi
Fujian
South
Coast
Yunnan
Guangxi
South
Central
Guangdong
Hong Kong
Hainan
Source: Economic Research Service, USDA.
Table F-1—Regional shares of population and production of major commodities, by region
Item
China
total
Northeast
North
South
coast
South
central
West
Percent
Population1
Gross domestic product
Cultivated land2
100
100
100
8
10
17
27
27
26
21
34
10
37
24
33
7
4
15
Production:3
Wheat
Corn
Rice
Soybeans
Meat
Fruit
Cotton
100
100
100
100
100
100
100
3
30
9
39
10
5
0
57
37
4
23
27
43
34
11
3
29
9
16
25
8
18
18
58
22
41
22
21
10
11
1
8
6
5
37
Note: Regional shares do not add to 100, due to rounding.
1 Year 2000.
2 1997.
3 1999.
Source: Calculated by ERS using data from China National Bureau of Statistics, "Communique on Major Figures of the 2000 Population
Census (No. 2)," Abstract of the First Agricultural Census in China, and Rural Statistical Yearbook 2000.
22 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
trade, since they have vibrant manufacturing export
sectors and rely on food imports, including highquality rice and wheat, corn, oilseeds, and poultry.
Provinces in northern and central China, which are
heavily populated by poor farmers growing crops
vulnerable to foreign competition, are more skeptical
of free trade. Development policies during the 1970s
and 1980s limited foreign investment to certain coastal
cities, accounting in part for the regional disparities in
income today. A new western development initiative
seeks to steer investment and development to China's
relatively poor and politically sensitive western
provinces. If WTO accession leads to greater regional
disparities, the central government may introduce more
region-specific development policies—perhaps
directed at agricultural areas or regions with industrial
unemployment—to preserve social stability.
What We Need to Know
Will China continue to evolve toward a unified
market with national companies and brands?
How will free trade after WTO accession affect
disparities between provinces and support for
national trade policy?
Will the central government be able to implement
policies at the local level?
Grain production is gradually being liberalized and
regionally integrated but has been subject to retrenchments, such as the mid-1990s Governor's Grain Bag
policy, which charged each provincial governor with
ensuring that local grain supplies were adequate to
feed the local population.
Further Reading
Central-Local Policy Conflicts
China's long history as a unified nation obscures the
fact that provincial and local governments have traditionally wielded considerable power that can block the
implementation of central government policies. The
traditional Chinese saying "The country is wide and
the emperor is far away" reflects the considerable
discretion and responsibility of local officials in implementing central government edicts handed down
through the country's vast bureaucracy. Plant and
animal quarantine offices, for example, are operated at
the local level and are self-funded. Some observers
speculate that local inspectors and officials may be
subject to local pressures to apply national sanitary or
phytosanitary standards to block shipments, thus benefiting local traders or producers. Similarly, foreign
firms given a green light by national authorities to
enter the China market may face local regulations,
taxes, or approvals that block access. In preparation for
its World Trade Organization (WTO) accession in
2001, China conducted a comprehensive review of
local regulations to bring them into compliance with
its WTO commitments.
Regional differences can pit provinces against one
another in national policy. For example, relatively
wealthy southern coastal provinces tend to support free
Economic Research Service/USDA
Liu, Bai-Yang, and Bong Joon Yoon. "China's Economic Reform and Regional Productivity Differentials," Journal of Economic Development, Vol. 25,
December 2000, pp. 23-41.
Luo, Xiaopeng, and Frederick W. Crook. "The Emergence of Private Rice Marketing in South China,"
International Agriculture and Trade Reports: China,
WRS-97-3, U.S. Department of Agriculture, Economic Research Service, June 1997.
Rozelle, S., A. Park, J. Huang, H. Jin. "Bureaucrat to
Entrepreneur: The Changing Role of the State in
China's Grain Economy," Economic Development
and Cultural Change, Vol. 48, January 2000, pp.
227-252.
Yang, Dali. Beyond Beijing: Liberalization and the
Regions in China, Routledge, 1997.
Young, Alwyn. "The Razor's Edge: Distortions and
Incremental Reform in the People's Republic of
China," Quarterly Journal of Economics, Vol. 115,
November 2000, pp. 1091-1135.
Zhou, Huizhong. "Implications of Interjurisdictional
Competition in Transition: The Case of the Chinese
Tobacco Industry," Journal of Comparative Economics, Vol. 29, 2001, pp. 158-182.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 23
Transportation and Distribution:
Will Bottlenecks Be Eliminated?
Brad Gilmour1 and Fred Gale
While reduced tariffs, nontrade barriers, and other
border measures may increase access to China’s
market, the market will still be effectively closed to
foreign suppliers if goods cannot get from the port to
the consumer. The efficiency of the transportation and
distribution network will also determine whether the
millions of farmers in China’s interior heartland will
be able to compete for the food dollars spent by
consumers in wealthy coastal cities and other Asian
markets. As transport and other marketing costs fall,
the economy will become more efficient in sending
price signals that will realign regional production
patterns, eliminate spot shortages, equalize prices, and
raise farm incomes in China’s interior provinces.
Freight Traffic Booming
The Chinese Academy of Social Sciences estimates that
transportation and logistics account for 20 percent of the
retail prices of goods in China (and even higher for
perishable products), about five times the transportation
share of food costs in the United States. China’s leadership seeks to reduce that share and has taken significant
measures to improve the country’s notoriously poor
transportation infrastructure. A surge in highway and
airport construction and a proliferation of highly competitive trucking firms, bus lines, and airlines now provide
alternatives to China’s aging railways for transporting
people and freight. From 1990 to 2000, highway mileage
in China increased by 36 percent and existing highways
were greatly improved. China’s railways, already the
longest in Asia, also increased track length by 19
percent. Double tracking, electrification, and higher
speed trains were introduced throughout the country.
Even the length of China’s inland waterways increased
by 9 percent. Newly constructed rail and highway
connections to networks in Southeast and Central Asia
and Russia are opening additional avenues for trade.
1
The views expressed in this article are those of the author and
do not necessarily reflect the views of Agriculture and Agri-food
Canada.
Despite this growth in capacity, China’s transportation
network remains strained because freight traffic is
growing at an even faster rate. Total freight traffic
increased by 39.6 percent from 1990 to 2000, with most
of the increase hauled on highways (table G-1). The
highway share rose from 75 to 77 percent between 1990
and 2000 as the railway share fell. More food is being
transported by truck, but rail remains the chief transport
mode for grain and other bulk commodities. Civil air
routes tripled in length during the 1990s and air freight
has grown dramatically, but air transportation still
accounts for only a small share of total freight traffic.
While the global shipping industry has generally been
contending with overcapacity, China’s seaports struggled to keep up with 160-percent growth in seaborne
freight volume from 1990 to 2000 (fig. G-1). The
country’s ports handled 56 million tons of grain in
2000, up 87 percent from 1990. Containerization and
intermodal facilities account for a growing share of
shipping freight. Container-handling facilities are in
short supply in China.
Cold Chain Facilities Critical
Warehousing and other storage facilities are critical to
an efficient marketing system. With China’s growing
consumption of high-value frozen and perishable
foods, cold warehousing and transport facilities are
becoming an important link in the country’s marketing
chain. Cold storage capacity is believed to be only 2030 percent of growing cargo demand, and spoilage
losses of up to 33 percent of perishable freight are
Table G-1—Increase in China freight traffic, 1990-2000
Mode
Highways
Rail
Waterways
Pipelines and other
Total
1990
2000
Million tons
7,240
10,388
1,506
1,744
801
1,224
159
189
9,706
13,545
Change
Percent
43.5
15.8
52.8
18.9
39.6
Source: China National Bureau of Statistics, China Statistical
Abstract 2001.
24 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Figure G-1
Major China ports, by volume of freight traffic, 2000 (million tons)
Qinhuangdao (97)
Tianjin (96)
Yingkou (23)
Dalian (91)
Yantai (18)
Qingdao (86)
Rizhao (27)
Lianyungang (27)
Shanghai (204)
Ningbo (115)
Fuzhou (24)
Xiamen (20)
Guangzhou (111)
Shenzhen (57)
Hong Kong (1,280)
Zhejiang (20)
Haikou (8)
Note: 23 million tons of freight were shipped through other ports not shown.
Source: China National Bureau of Statistics, China Statistical Abstract 2001.
common. Most of China’s food is still transported by
rail, but lack of temperature-controlled equipment and
logistical problems make it costly to transport foods,
particularly frozen and perishable foods.
China’s lack of electricity and its inadequate infrastructure also have indirect impacts on food demand.
Refrigerator ownership enables Chinese consumers to
purchase more frozen and perishable foods and spend
more of their food dollars at supermarkets. Refrigerator
ownership, in turn, depends not only on consumer
incomes but also on reliability of electricity supplies.
Similarly, improvements to local roads and increases in
automobile ownership will change the food distribution
system by making it cheaper for consumers to travel to
centralized retail centers and improving access to
modern food markets to rural consumers.
Industry Restructuring Needed
China will continue to expand its transportation infrastructure through a combination of public and private
Economic Research Service/USDA
investment. In the next 5 years, China is expected to
add an additional 200,000 km of highways to the
existing 1.4 million km. Annual public highway
spending has been roughly $25 billion in recent years,
but international financing agencies and private
investors have assisted in funding highway projects.
Nearly all high-grade highways generate significant
toll revenues that can make highway investments
attractive. Joint ventures with overseas interests have
played an important role in upgrading port facilities.
An improved infrastructure by itself will not bring efficiency to China’s food marketing system. Restructuring
and competition in the marketing sector are needed to
ensure that food is transported, stored, and marketed efficiently. A government monopoly still manages the rail
system. The State Price Bureau sets rail rates based on
socialist accounting principles rather than market forces,
financial viability, or customer impact. A large proportion of cold storage facilities are controlled by local
bureaus formerly under the now-defunct Ministry of
Internal Trade. In rail transport, grain bureaus, and other
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 25
What We Need to Know
Will lack of refrigerated and container handling
facilities affect trade patterns?
Will transportation and marketing infrastructure
allow agricultural production to concentrate in
least-cost regions?
Will transportation bottlenecks limit the growth of
China’s fruit and vegetable exports?
Will improved transportation reduce regional
inequality by allowing coastal growth to spill over
to interior regions?
parts of the marketing chain, the volume of product
handled per employee is very low, suggesting considerable inefficiencies.
China’s government is trying to reform domestic distribution industries by separating policy and administrative
functions from commercial operations and breaking up
monopolies into multiple commercial companies that
will compete with one another. Competition will intensify as a result of the country’s WTO accession, when
foreign companies will be allowed to enter the railway
cargo service sector and operate their own internal distribution networks. China’s domestic food marketing sector
appears vulnerable; however, foreign entrants in China’s
food retailing sector have faced stiff competition and a
number have exited the China market altogether.
Shifting Regional Production and Trade
The geographic distribution of food supply and demand
makes distribution costs an important factor in determining the structure of both foreign and domestic interregional trade. Imported rice, wheat, edible oils, and
other high-value products are consumed largely in
wealthy coastal cities, mostly in southern China. Since
these areas are near ports and have good transport infrastructure, transportation bottlenecks will be less of a
concern for importers of these products. New soybean
crushing plants have been constructed near ports to facilitate access to imported beans. Transport problems will
have more effect on feed grain imports and the livestock
sector. Currently, much of China’s livestock production
occurs in inland provinces, while demand for livestock
products is growing in wealthy coastal cities. As livestock numbers and the adoption of modern feeding practices increase, more feed grain imports will be needed to
meet demand. If the cost of transporting feed grain to
inland locations remains high, livestock production may
shift eastward toward coastal cities to give producers
better access to both final markets and imported feed
grains. Unless managed carefully, this trend could
increase land and labor costs and the likelihood of environmental damage by expanding the livestock industry
in highly populated, wealthy areas.
Failure to reduce transport costs may also increase
regional income differentials. If domestic transportation margins remain high, it will be difficult for
farmers in inland provinces to compete with suppliers
in other regions. Continued bottlenecks in the
country’s domestic transportation infrastructure and
inefficient marketing industries will make it difficult
for inland Chinese producers to compete with overseas
producers for the growing coastal China market and
markets in neighboring Asian countries. High transport
and marketing costs would therefore limit the potential
size of the market for inland farm products and keep
farm incomes low in China’s interior.
Further Reading
Caron, Jim, April Taylor, and Lloyd Harbert. “U.S. China Agricultural Transportation,” U.S. Department of Agriculture, Agricultural Marketing Service, August 27, 2001, http://www.ams.usda.gov/
tmd/Countries/China/
Coyle, William, William Hall, and Nicole Ballenger.
“Transportation Technology and the Rising Share of
U.S. Perishable Food Trade,” Changing Structure of
Global Food Consumption and Trade, Anita Regmi
(ed.), Agriculture and Trade Report WRS-01-1, U.S.
Department of Agriculture, Economic Research Service, May 2001.
Luo, Xiaopeng, and Frederick W. Crook. “The Emergence of Private Rice Marketing in South China,”
International Agriculture and Trade Reports: China,
WRS-97-3, U.S. Department of Agriculture, Economic Research Service, June 1997.
Rozelle, S., A. Park, J. Huang, and H. Jin. “Bureaucrat
to Entrepreneur: The Changing Role of the State in
China’s Grain Economy,” Economic Development
and Cultural Change, Vol. 48, January 2000, pp.
227-252.
26 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Will China’s Agricultural Trade Reflect Its
Comparative Advantage?
Colin A. Carter and Scott Rozelle
China is potentially an important global trader of agricultural commodities, a role that will become more
pronounced following the country’s World Trade
Organization (WTO) accession. At various times
during the 1990s, China imported as much as 17
percent of the world’s traded wheat, 25 percent of its
fertilizer, and 28 percent of its soybean oil, while
exporting as much as 10 percent of the world’s traded
corn. China’s role in global agricultural trade has been
modest, and the country has run small annual agricultural trade surpluses in recent years (fig. H-1).1
Since 1980, agricultural trade has grown slowly in
comparison with China’s surging merchandise trade
(fig. H-2). The nominal value of China’s total
merchandise exports and imports grew at annual rates
of about 13 percent from 1980 to 1999 (World Bank).
Agricultural exports and imports grew considerably
slower, at average annual rates of 6.6 percent (exports)
and 5.0 percent (imports). Growth in the real value of
agricultural trade (exports plus imports) averaged only
2 percent annually from 1980 to 1999—less than half
the growth rate of real agricultural Gross Domestic
Product. The agricultural share of China’s trade fell
from about 33 percent in 1980 to about 7 percent in
1999—reflecting export-led industrial growth,
improved resource allocation among sectors, and the
shifting of comparative advantage from agriculture to
light manufacturing.
While growth in China’s agricultural trade has been
slow in comparison with the rapid growth of its industrial exports, China’s share of world agricultural trade
actually increased somewhat to just under 3 percent in
2000 (World Trade Organization). China still maintains many barriers to agricultural trade, but it has
liberalized trade considerably in a sector in which
protection is high in many other countries.
Shift Toward Comparative Advantage
Broadly speaking, the rationale for freer international
trade lies in the efficiency gains that a country enjoys
through using resources most efficiently by specializing in production in certain goods and trading these
goods in world markets. Specialization according to
comparative advantage means that a country produces
commodities that are best suited to the country’s
resource endowment, and this raises national income.
A shift toward freer trade may provide added sidebenefits from scale economies and increased domestic
competition. With an abundant rural labor force relative to its land base, China has a comparative advantage in labor-intensive agricultural products, such as
fruits and vegetables, and manufactured agricultural
products. However, agricultural policy in China and
trade barriers in other parts of the world have tilted
China’s agricultural production away from its comparative advantage.
Figure H-1
China agricultural exports and imports, 1992-2000
$ billion
25
20
Exports
15
Imports
10
5
1992
1
China’s status as a net exporter or importer of agricultural products depends on which commodities are classified as “agricultural.”
China is a net importer of grains, oilseeds, and industrial inputs,
such as cotton, textiles, hides, and skins. It exports manufactured
foods, beverages, fish, tea, fruits, and vegetables.
Economic Research Service/USDA
94
96
98
2000
Note: Data not adjusted for inflation.
Source: ERS analysis of China customs statistics reported
in Hsin-Hui Hsu and Fred Gale, China: Agriculture in Transition,
USDA/ERS Agriculture and Trade Report WRS-01-2, November
2001, appendix tables 5 and 6.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 27
Grain Self-Sufficiency Remains a Priority
Figure H-2
China agricultural and nonagricultural trade,
1980-2000
$ billion
500
400
300
200
Agricultural
Nonagricultural trade
100
0
1980 82
China’s policy emphasis on grain self-sufficiency may
have impeded the shift toward comparative advantage in
trade. Throughout the 1980s, the external grain trade
was used to balance supply and demand for individual
food and feed grains. In the 1990s, as China’s lack of
comparative advantage in grain production became
more apparent, the target for domestic grain self-sufficiency was lowered to 95 percent of total grain
consumption needs. Grain self-sufficiency remains a
high priority, albeit with a less stringent criterion.
84
86
88
90
92
94
96
98 2000
Note: “Agricultural” includes primary goods less mineral fuels.
“Nonagricultural” includes mineral fuels, lubricants, manufactured
products, and other goods. Data not adjusted for inflation.
Source: China customs statistics data as reported in
China Statistical Yearbooks.
China’s declining comparative advantage in grains and
other land-intensive crops should lead to increased net
grain imports in the future. A gradual shift in the
composition of imports from food to feed grains seems
inevitable as well. In addition, China will most likely
expand its exports of more labor-intensive crops, such
as fruits and vegetables, and manufactured agricultural
products such as textiles.
China’s mix of agricultural trade has expanded
modestly along comparative advantage lines since
1980. However, imports of land-intensive commodities
have not risen significantly, and China is still only a
small net importer of grains and oilseeds. Exports of
fruits and vegetables have shown little trending.
A cereal grain export blockade, in effect during
portions of 1994 to 1996, had a strong impact on
China’s grain trade. Net grain imports rose during the
embargo and fell in 1997, the first full year following
the lifting of the embargo. The importance of grain
exports to China’s agricultural trade has since fallen.
Thus, the embargo appears to have accelerated the
declining trend in cereal exports, as China’s exports
shift toward commodities in which it has a comparative advantage.
China is trying to improve the efficiency and responsiveness of its trading system in meeting national
requirements, an objective that sometimes conflicts
with self-sufficiency. During the 1990s, China initiated
a number of policy and institutional reforms to
improve market efficiency, including consolidating
exchange rates, eliminating most government-determined prices, encouraging competition by decentralizing and deregulating the trade of many commodities,
transforming trading companies into handling agents,
reducing the number of commodities requiring import
and export licenses, and reducing tariffs.
For most commodities, foreign trade has been decentralized and competition has increased. The number of
firms eligible to engage in foreign trade increased
from about 1,200 in 1986 to about 200,000 in 1996.
However, agricultural trade in “strategic commodities,”
such as food grains, textile fibers, and chemical fertilizers, continues to be restricted to specialized and
monopoly national trading corporations. The government’s Cereal, Oil & Foodstuffs Importing and
Exporting Corporation (COFCO) controls most of
China’s international grain trade for national and
provincial grain-trading companies. Prior to China’s
WTO accession, COFCO handled almost all imports
and exports of China’s grains, oilseeds, and vegetable
oils, making it an exceptionally large trading company.
China’s WTO accession terms included commitments
to set aside specified shares of wheat, corn, rice,
vegetable oils, sugar, and cotton that could be
imported by any end user. Some national trading
corporations have been transformed into for-profit
enterprises, including COFCO for grain, edible oil,
and sugar; China National Chemicals Import and
Export Corporation for chemical fertilizer; and the
Cotton Import and Export Company of China.
28 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
The monopoly structure of China’s state trading may
account for the erratic nature of China’s agricultural
trade. However, one of the most important effects of
China’s WTO accession agreement may be the weakening of state trading monopolies. COFCO’s wide
year-to-year swings in trade volume have contributed
to price fluctuations within China. While price stabilization is an important goal of China’s trade policy,
China’s domestic prices of rice, wheat, and corn have
all been more volatile than international prices.
COFCO may have even exacerbated domestic price
volatility by importing during periods of relative grain
abundance and exporting during periods of relative
grain scarcity. The lack of transparency in China’s
trade transactions also causes uncertainty by withholding information from COFCO’s customers and
suppliers. China’s accession to WTO will diminish
COFCO’s monopoly power by setting aside shares of
grain imports for nonstate traders. This commitment
will increase the amount of competition and transparency in China’s grain trade and forge a stronger
link between domestic and international prices.
Grain trading in China still remains subject to import
and export licenses and quotas. However, for other
commodities, such as soybeans, trade has been more
open and competitive for several years. Restrictions
against importing soybeans were almost completely
removed during 2000 and 2001, and soybeans entered
China at near world prices, until problems with import
inspections and uncertainty over new biotechnology
regulations slowed imports in mid-2001.
What We Need to Know
Will China increase imports of grain and other
bulk commodities in accordance with its comparative advantage?
Will increased competition in trade improve
domestic efficiency and transparency and reduce
farm-processor price spreads?
How will increased participation of nonstate
trading entities affect domestic price stability and
domestic and international price linkages?
Will state traders remain competitive without
government-sanctioned monopoly status?
Will nontariff barriers remain important after
WTO accession?
significant depreciation of the renminbi between 1990
and 1994 (when the currency lost more than 40
percent of its value), the IMF estimates that the
renminbi has been overvalued from 8 to 13 percent
since 1995. This situation was exacerbated by China’s
resolve not to devalue its currency during the 1998
Asian financial crisis. Agricultural protection rates
remained negative in recent years when calculated at
real effective exchange rates. If the impact of the overvaluation of the domestic currency and the trade
protection system is considered, agricultural incentives
are further distorted, depressing food prices and redistributing income from farmers to urban consumers and
the agroprocessing sector.
Reforms Reduce Distortions
Until the mid-1990s, China consistently taxed farmers
by maintaining farm-gate prices below border price
equivalents, but taxation of farmers has diminished in
recent years. By 1997, most farmer procurement and
farmer market prices approached international price
equivalents—and for brief periods in 1996/97 may have
exceeded international prices. Nominal protection rates
estimated at official exchange rates for the major grains,
oilseeds, and cotton clearly show declining negative
protection (i.e., taxation) over the 1980s and 1990s and
now hover within a 10 percent band around zero.
Exchange rate policies, however, still impose an
implicit tax on many commodities because China’s
currency is overvalued. According to the International
Monetary Fund (IMF), China’s renminbi is fixed
above the free market rate. Even though there was a
Economic Research Service/USDA
China has used subsidies for encouraging exports in
some years (such as corn in 2000), but the support has
been relatively small and only available in some
provinces. Not surprisingly, exportable commodities—
such as rice, corn, and cotton—are more heavily taxed
than importable commodities, such as wheat. Export
subsidies were ended as part of China’s WTO accession commitments.
Trade Barriers: How High?
In 2001, China’s agricultural import tariffs of 40 to 60
percent were higher than the average for industrial
goods (17 percent). However, China’s WTO commitments call for annual tariff reductions that will cut the
average agricultural tariff to 17 percent by 2004.
China’s average agricultural tariffs will be considerably lower than those of most developing countries. In
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 29
the first few years after China’s WTO accession,
limited imports of important agricultural commodities
(grains, cotton, vegetable oils, wool, and sugar) under
a maximum tariff-rate quota (TRQ) will be allowed to
enter at tariffs as low as 1 percent. Imports above the
TRQ quantity will be assessed a tariff that is much
higher, but still below those assessed by many other
countries. WTO commitments will likely preclude
China from following the protection-based agricultural
trade policies used by its more developed East Asian
neighbors.
While China’s tariff reductions suggest more open
trade, China also maintains a variety of nontariff
barriers that restrict imports, including import licenses,
and state trading. Phytosanitary and food safety measures, such as China's regulations on genetically modified agricultural products, should be science based,
according to WTO rules, but many observers are
concerned that China will use such measures to block
imports (see “Is Biotechnology in China’s Future?” in
this report).
Little evidence points to increased reliance on comparative advantage in China’s agriculture. The modest and
limited expansion of agricultural trade along comparative advantage lines is striking, despite an overall
increase in China’s foreign trade. The country’s WTO
membership is likely to have a significant impact on
the future pattern of China’s agricultural trade,
assuming the WTO will reduce China’s tariff and
nontariff agricultural trade barriers and those of its
trading partners.
Further Reading
Carter, C.A., and S. Rozelle. “Will China Become a
Major Force in World Food Markets?” Review of
Agricultural Economics, Vol. 23, Fall/Winter 2001,
pp. 319-332.
U.S. Trade Representative. National Trade Estimate
Report on Foreign Trade Barriers: China, U.S.
Trade Representative, 2001.
World Bank. World Development Indicators, World
Bank, 2001.
World Trade Organization. International Trade Statistics
2001, World Trade Organization, 2001,
http://www.wto.org/english/res_e/statis_e/statis_e.htm
30 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
How Might China Protect Its
Agricultural Sector?
Cheng Fang, Francis Tuan, and Funing Zhong
China has insulated its domestic food markets from
foreign competition and world price fluctuations by
maintaining tight control on agricultural trade. As
China opens its agriculture to foreign competition after
World Trade Organization (WTO) accession, will it
protect its farmers?
Urban Subsidies Give Way to Farm Aid
From the 1950s through the 1970s, Chinese farmers
were effectively taxed rather than subsidized. Under
the centralized government procurement system,
farmers were paid low prices for mandatory sales of
commodities to the government. After rural reforms
began in 1978, the government raised procurement
prices to stimulate grain production while continuing
to sell grain to urban consumers at subsidized retail
prices. China’s official statistical reports indicate that
spending on price subsidies (mostly grain crops and
some livestock products) was 71.2 billion yuan ($8.7
billion) in 1998, up from 7.9 billion yuan in 1979.
Until the 1990s, most of these subsidies accrued to
urban consumers and processors that paid subsidized
prices, sometimes below the price paid to farmers.
Low commodity prices benefited urban consumers and
yielded government revenues from export sales and
taxes paid by agroprocessors’ profits. As urban residents’ income and agricultural production increased
over the past two decades, widespread urban food
subsidies became unnecessary and taxation of agriculture began to disappear.
In the late 1990s, the government tried to boost farm
incomes by procuring grain at above-market support
(“protective”) prices. In some years, China maintained
prices of important commodities, such as wheat,
soybeans, and corn, substantially above international
levels by keeping a tight reign on imports through
unannounced quotas and license requirements, maintaining government monopolies on import and export
of commodities, subsidizing exports, and taking other
measures (fig. I-1). Input subsidies and government
Economic Research Service/USDA
support for infrastructure and research also aided the
agricultural sector.
Still, not all commodities in China are subsidized.
Some commodities have prices below international
levels (negative protection). Rice, a staple food and a
source of modest export revenues, is the most notable
example. Some argue that overvaluation of the Chinese
currency in the years after the 1998 Asian financial
crisis (when the central government resisted pressure
to devalue) hurt farmers by reducing the effective cost
of products from competing countries. Finally, there
have been concerns that central government subsidies
have been absorbed by the bureaucratic grain
marketing system or offset by rising local taxes and
fees assessed on farmers. Data on local taxes and fees
are scarce, but estimates indicate that local agricultural
taxes and fees amount to 25 percent of farmers’ net
income. Thus, on the whole Chinese farmers are still
taxed, although the level of taxation is lower than in
the past.
Open Markets Will Challenge Farmers
China’s protection of agriculture has relied on strict
control of agricultural trade, but China’s WTO accession will substantially reduce tariffs on most agricultural products, eliminate export subsidies, and loosen
state control over imports and exports. The government will also be required to publish information
about import quotas and regulations. Trade in
commodities previously dominated by state trading
entities will be opened to nonstate trading companies.
Tariffs on nongrain products will range from 3 to 20
percent. Imports of grains, cotton, vegetable oils, wool,
and sugar will be allowed to enter at minimal tariff
rates up to set limits—tariff-rate quotas (TRQ)—from
2002 to 2004. Soybeans and soymeal will have bound
tariffs of 3 percent (soybeans) and 5 percent
(soymeal). By comparison, the world average tariff for
food and agricultural products is 62 percent (U.S.
Department of Agriculture). The terms of China’s
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 31
Figure I-1
China farm gate and world reference prices,
1985-2000
What We Need to Know
Yuan per ton
What is the long-term self-sufficiency level for
China’s agriculture?
Wheat
1,800
Could regional liberalization of grain self-sufficiency affect China’s overall agricultural protection?
1,600
China
1,400
1,200
Which “boxes” and what measures will be used
after the WTO accession?
1,000
FOB U.S. Gulf
800
Who will provide funds for subsidies to farmers:
central or local governments?
600
400
200
0
1985
87
89
91
Yuan per ton
3,500
93
95
97
99
Soybean
3,000
China
2,500
2,000
1,500
CIF, U.S. Rotterdam
1,000
500
0
1985
87
89
91
Yuan per ton
1,400
93
95
97
99
Corn
1,200
China
1,000
800
FOB U.S. Gulf
600
400
200
WTO accession could make it one of the most open
countries in the world in terms of agricultural trade.
In a more liberalized agricultural trade environment,
China’s government will likely search for ways to
protect agriculture to maintain grain self-sufficiency;
stabilize domestic markets in the face of droughts,
floods, and world price fluctuations; support farm
incomes; and preserve social stability. China’s farmers
are internationally competitive in many commodities,
but the country’s corn and cotton prices were substantially above world levels at the time of China’s WTO
accession. Impacts on Chinese farmers of open
markets will likely be modest and gradual, but China
may implement policies to mitigate adverse effects of
WTO accession since roughly half of its population
relies on agriculture.
Self-Sufficiency Main Concern
Self-sufficiency in grain has been the government’s
main concern in formulating China’s agricultural
production and trade policy. WTO accession will not
threaten self-sufficiency—now defined in China as
meeting 95 percent of domestic food grain needs—in
the near term. China has produced all of its own rice
(and has been a net exporter) for the past two decades,
and that trend is likely to continue in the near future.
Even if TRQs for wheat and rice were to be entirely
filled in the years following China’s WTO accession
(which many expect to be unlikely), grain imports
would still be well below 5 percent of consumption.
0
1985
87
89
91
93
95
97
99
Source: China Price Bureau and International Monetary Fund,
International Financial Statistics.
In the longer term, market forces may bring about
structural adjustments within the agricultural sector,
such as movement of resources out of grain production
and into more labor-intensive crops that use less land.
The small scale of farms prevailing in China makes
32 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
producing grain less profitable than producing highvalue products, such as horticultural crops or livestock.
In the long term, it is possible that market forces could
push imports of food grain past the 5-percent
threshold. China will likely continue to produce most
of its own grain even without subsidies, but government leaders may institute policies, at least for the
next several years, to keep grain self-sufficiency below
the 5-percent threshold.
Subsidies: Room for Growth
Concerns about low rural incomes or excessive
reliance on imports could motivate China’s government to increase subsidies for agriculture through price
supports, income transfers, and indirect subsidies. The
Uruguay Round Agreement on Agriculture (URAA)
classified price supports as an “amber-box” tradedistorting policy, the use of which should be limited.
As part of its WTO commitments, China agreed that
the value of its trade-distorting amber-box support for
agriculture would not exceed 8.5 percent of its total
value of agricultural output (China’s de minimis
exemption). China’s current amber-box support is
minimal, so there is considerable potential for China to
provide price support to farmers while remaining
within its WTO commitment. Internal budgetary
constraints are likely to keep subsidies far below the
committed level. The 8.5-percent annual threshold
based on China’s current crop output value would
amount to $14 billion.
The URAA placed no limits on “green-box” subsidies,
which do not directly distort trade. These subsidies
include government-supported research, disease
control, infrastructure, and policy subsidies for certain
grain marketing and promotion services. The greenbox category also includes income-support payments
made directly to farmers that do not stimulate production, assistance to help farmers restructure agriculture,
and environmental and regional assistance programs.
Green-box payments must come directly from
Economic Research Service/USDA
taxpayers and cannot involve transfers from
consumers. China will likely use green-box subsidies
to further improve infrastructure and research, develop
and import new grain varieties and technologies,
address water shortages, and adjust agricultural
production structure. Spending on these programs will
also be constrained by availability of funds.
China’s agricultural policy is devolving to some extent
to the provincial level. In wealthy areas in coastal
provinces, provincial governments are looking at
possible approaches for subsidizing farmers within
their provinces. Grain-deficit coastal provinces have
now eliminated government-set procurement prices and
are relying on markets to determine grain prices.
Government procurement prices are still set for key
commodities in grain-surplus provinces in China’s
central and northeastern regions. China will face a great
challenge in protecting incomes of the huge number of
farmers in the poorer central and western provinces that
are still heavily dependent on agriculture.
Further Reading
Tuan, Francis, and Guoqiang Cheng. “A Review of
China’s Agricultural Trade Policy, 2001,” Presented
at International Agricultural Trade Consortium, San
Francisco, CA, 1999.
U.S. Department of Agriculture. Food and Agricultural
Policy: Taking Stock for the New Century, U.S.
Department of Agriculture, September 2001.
World Trade Organization. “Agriculture: Fairer Markets for Farmers,” WTO Web site,
www.wto.org/english/thewto_e/whatis_e/tif_e/agrm3
_e.htm
World Trade Organization. “Agreement on Subsidies
and Countervailing Measures (“SCM Agreement”),”
WTO Web site,
www.wto.org/english/tratop_e/scm_e/subs_e.htm
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 33
Is Biotechnology in China’s Future?
Fred Gale, William Lin, Bryan Lohmar, and Francis Tuan
China is at the forefront of plant biotechnology
research and is the world’s fourth-ranked country
(behind the United States, Canada, and Argentina) in
area sown to biotech crops. Genetically modified
(GM) varieties of all of China’s major crops, as well as
some fish and livestock, are in development or testing,
but by 2001 only a few GM plant varieties had
received commercial approval, including two types of
cotton (which account for nearly all of China’s biotech
crop plantings) and varieties of tomatoes, sweet
peppers, and petunias (table J-1). GM tobacco was
China’s first transgenic crop widely grown in the early
1990s, but it was withdrawn due to trade concerns.
Insect-resistant Bt (Bacillus thuringiensis) cotton,
approved for commercialization in 1997, accounted
for most of China’s acreage planted in GM crops in
2001. Adoption of Bt cotton revived cotton production in the north China plain, where devastating boll
worm infestations had affected production in the mid1990s. Bt cotton was quickly accepted by farmers
Table J-1—Number of genetically modified plants
approved in China through 1999
Crop
In trials or awaiting
commercialization
Commercialized
Number of varieties
Cotton
Rice
Wheat
Corn
Soybean
Potato
Rapeseed
Tobacco1
Peanut
Cabbage
Tomato
Sweet pepper
Petunia
Other
13
16
1
2
2
8
2
4
1
1
5
2
2
6
2
0
0
0
0
0
0
1
0
0
1
1
1
0
1 Insect-resistant tobacco was commercialized in 1992 but stopped in the
mid-1990s for trade reasons.
Source: Huang, J., Q. Wang, and Y. Zhang. "Agricultural Biotechnology
Development and Research Capacity in China," Center for Chinese
Agricultural Policy, Chinese Academy of Sciences, February 2001.
and accounted for nearly all cotton grown in Hebei
province in 2000. China’s success with Bt cotton
suggests that biotech crops can have dramatic
impacts on agriculture. Insect-resistant cotton varieties reduced production costs by 14-33 percent (Pray
et al.), reduced farmer health risks, and improved
water quality by reducing the frequency of pesticide
sprayings. Preliminary calculations suggest that
shortrun benefits of Bt cotton far exceed the costs of
the crop’s development (Huang et al.).
Though China’s government has enthusiastically
backed biotech research since the 1980s, its slowness
in approving biotech food crops seems to represent a
cautious approach to releasing GM foods to the
market. In light of emerging consumer concerns about
GM foods in Europe, Japan, and South Korea during
the late 1990s, policymakers may have second
thoughts about the safety of genetically modified
foods. Alternatively, China’s caution in releasing GM
varieties may be a strategic move aimed at gaining a
competitive edge in overseas markets by keeping
China’s production free of genetically modified varieties. The long delay in publishing final biotech regulations in 2001 and the lack of details in those
regulations suggest that policymakers are still debating
the biotech issue.
Strong Commitment to Biotech Research
Most biotech research in China has been governmentfunded. During the 1990s, China’s investment in plant
biotechnology rose at a significant rate. Between 1995
and 1999, biotech spending more than doubled from the
equivalent of $40 million to $112 million and China
announced plans to increase research budgets 400
percent over the next 5 years (Huang et al.). Biotech
research in animal and plant agriculture combined is
estimated to account for 15 percent of China’s agricultural research, much higher than the 2-5 percent share
typically devoted to biotech research in developing
countries. China accounts for an estimated 10 percent of
the world’s public expenditures on agricultural research
and development (Pardey and Beintema).
34 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
China’s share of total biotech research expenditures is
much smaller than its share of public expenditures
because there has been little private research in China.
Private spending has been estimated to account for
half of biotechnology research expenditures worldwide. Most of the genetically engineered herbicideand insect-tolerant corn, cotton, canola, and soybean
varieties that have been widely adopted by farmers
outside China were developed by the private sector. In
China, a Bt cotton variety developed by Monsanto is
the only private sector variety that has been widely
adopted. Lack of protection for intellectual property
rights and restrictions on foreign firms have kept many
foreign agricultural biotech firms from entering the
China market.
The most popular genetically engineered varieties
developed by the private sector have appealed to
farmers on the basis of the cost and labor savings they
promise. The early commercial successes have been
GM crops for feed and industrial use (soybeans, corn,
and cotton). In contrast, China’s biotech research
program has devoted a larger share of resources to
increasing yield and pest resistance in rice and other
food crops, a reflection of the government’s concerns
about food security. Private firms have tended to
concentrate on developing seeds for high-volume,
high-margin markets for widely grown crops in order
to recover the high initial development and regulatory
approval costs in Western countries. China’s research
institutes have developed an inventory of smaller
specialty varieties (vegetables, flowers, peanuts,
tobacco, fish, and animals) that may give China’s
farmers a competitive edge in niche markets in China
and other developing countries.
Will Consumer Acceptance Continue?
The sparse information available suggests that the
public and news media in China have been supportive
of agricultural biotechnology. A 1999 Environics
International survey of consumers in 10 countries
found that China’s consumers were among the world’s
strongest supporters of agricultural biotechnology
research (fig. J-1). Preliminary 2001 survey results
reported in China’s official newspaper, China Daily,
indicated that China’s consumers had a high level of
awareness, but little accurate knowledge, of GM foods.
The support for biotechnology probably reflects the
government’s traditionally strong support, since the
news media is controlled by the state. A shift in official policy regarding genetically modified foods could
Economic Research Service/USDA
Figure J-1
Attitudes toward biotech crops in various
countries, 1999
How do you feel about the use of biotechnology to
grow pest-resistant crops requiring fewer chemicals?
China
United States
India
Canada
Japan
Germany
France
Russia
Great Britain
Spain
0
20
40
60
Percent
80
100
Strongly favor or somewhat favor
Somewhat oppose or strongly oppose
Source: Environics International, reported in Washington Post,
October 16, 1999.
lead to a change in media coverage and in consumer
attitudes. Some scientists have expressed concern that
consumer attitudes could easily be shifted by inaccurate or negative media coverage (Sheng).
Markets for GM-free foods have developed in Japan
and other countries. Such markets could develop in
China as consumers direct more attention to food
safety and environmental issues. However, most
Chinese consumers will probably not be willing to pay
the substantial price premium associated with costly
segregation and identity-preservation transportation,
storage, and handling methods required to ensure that
such products are free of GM content.
Regulatory Environment Uncertain
In January 2002, China published regulations that
required labeling and safety certification for all GM
animals and plants entering China for sale, production,
processing, or research. Foreign companies selling
genetically modified organisms (GMO) for seed,
production, or processing and importers intending to
use GMOs for research purposes are required to obtain
a GMO safety certificate from China’s Ministry of
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 35
Agriculture. The application for the certificate requires
documentation that the GM product has been found to
be safe and is permitted for use and sale in the
exporter’s home country, and applicants must specify
safety measures to be taken in the course of exporting
the GMO to China. China’s regulations require
importers to be issued safety certificates before they
can sign contracts to import GMO products to China,
and the approval process for certificates can take up to
270 days. The products specifically covered include
soybeans, rapeseed, oil and meal made from soybeans
and rapeseeds, corn, cotton seeds, and tomatoes, and
the regulations direct China’s State Council to issue a
full list of products that require GMO labeling.
The initial regulations published by the Chinese
government left important details unspecified. Trade in
soybeans was disrupted as traders waited to see
whether imports of GMO soybeans would be allowed
under the new regulations. The United States raised
concerns that the lack of details given, the complexity
of the regulations, and apparent discriminatory treatment of imported versus domestic products could
disrupt trade in oilseeds and corn. Costly paperwork to
obtain safety certificates, testing, and uncertainties
about whether shipments will be approved for import
could raise costs for Chinese processors and reduce
China’s imports from the United States, Canada, and
Latin America, where GM varieties of oilseeds and
corn are widely grown.
The effects of China’s GMO regulation will be determined in large part by how inspection, testing, and
approval are administered and operated. Testing for
biotech content must be rapid, economical, accurate,
and standardized. Failure to effectively regulate the
dissemination and marketing of bioengineered plants
and animals could lead to consumer dissatisfaction and
wide resistance to biotechnology if defective or
harmful varieties are released or consumed by the
public. China will also need to carefully regulate and
monitor biotech producers to ensure that safe and
appropriate practices are used in the cultivation of
biotech crops. For example, plantings of Bt cotton
should be interspersed with non-Bt “refuges” to
prevent development of resistant pests, but it is not
clear that this practice is being followed in China.
Public Versus Private Sector
Will the private sector play a bigger role in China’s
biotech research? Until recently, China’s fragmented
What We Need to Know
Will China’s regulation of biotechnology boost or
retard the dissemination of GM food and fiber?
Will imports be affected?
Will Chinese consumers’ acceptance of genetically modified foods continue?
How will the adoption of GM crops in China
affect exports to other Asian countries vis-à-vis
U.S. products?
How will the structure of the Chinese seed market
evolve as foreign firms gain entry and how will
this affect farm input costs and access to seed
technology?
seed industry was made up of small regional companies that relied on the public sector for research and
development. However, in recent years the seed
industry has begun to commercialize. Several large
companies from other sectors of the economy have
bought up local seed companies to forge them into
national companies. A number of provincial seed
companies and research institutes have been able to
raise capital on the stock markets. A few foreign
companies have been allowed to enter the Chinese
seed market and are likely to grow further following
China’s WTO accession. To encourage further biotech
development in the domestic seed market, China is
strengthening protection for intellectual property rights
and relaxing restrictions on private and foreign firms.
Further Reading
Directorate-General for Agriculture, Commission of
the European Communities. Economic Impacts of
Genetically Modified Crops on the Agri-Food
Sector, Working Document Rev. 2, Undated,
http://europa.eu.int/comm/agriculture/publi/gmo/full
rep/index.htm
Huang, J., S. Rozelle, C. Pray, and Q. Wang. “Plant
Biotechnology in the Developing World: The Case
of China,” University of California-Davis REAP
working paper, September 6, 2001,
http://www.reap.ucdavis.edu/working_papers/plant_
biotechnology.pdf
Pardey, Philip G., and Nienke M. Beintema. Slow
Magic: Agricultural R&D a Century After Mendel,
International Food Policy Research Institute, Food
Policy Report, October 2001.
36 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Sheng, He. “Heard of It, But What Is It?” China Daily,
August 16, 2001.
Pray, C., D. Ma, J. Huang, and F. Qiao, “Impact of Bt
Cotton in China,” Presented at 4th International
Consortium on Agricultural Biotechnology
Research in Ravello, Italy, August 24-28, 2000.
Pray, Carl E. China, Private Investment in Agricultural
Research and International Technology Transfer in
Asia, Carl E. Pray and Keith O. Fuglie (eds.), Agriculture Economics Report No. 805, U.S. Department of Agriculture, Economic Research Service,
November 2001.
Economic Research Service/USDA
U.S. Department of Agriculture, Foreign Agricultural
Service. China, People’s Republic of, Oilseeds and
Products, MOA Assesses the Impact of Biotech Regulation, GAIN Report No. CH1028, June 27, 2001,
http://www.fas.usda.gov/gainfiles/200106/
115681097.pdf
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 37
Does China’s Land-Tenure System
Discourage Structural Adjustment?
Bryan Lohmar and Agapi Somwaru
China’s land-tenure system combines private use rights
with public ownership to provide economic incentives
for farm households, while stopping short of allowing
full land ownership and alienable rights. Nominally,
agricultural land is collectively owned by the xiaozu,
which are groups of 30-40 households (hereafter called
groups); in some cases, the village is the collective
owner (there are around 10 groups in each village).
Regardless of who owns the land, the village leadership may still influence, or sometimes dictate, land-use
and land-allocation decisions.1
Farmers Are Allocated Use Rights
Under collective ownership, farmers in China do not
own the land and cannot sell it. Instead, village authorities allocate farm households use rights, or rights to
cultivate specific parcels of land.2 Villages can divide
land parcels into four tenure categories, each with
different rights and responsibilities attached, but not all
villages differentiate among all four categories (table K1). The most common allocation is “responsibility
land,” which is allocated to households in return for the
household’s commitment to deliver a quota of grain.
The bundle of rights extended to farmers varies among
villages, sometimes among groups in the same village,
and also according to the tenure category of each parcel.
Households are allocated land-use rights so long as they
use the land for agricultural production. Aside from use
rights, the most important right allocated to farm households is the right to residual income, which allows
farmers to freely sell their output (except for a grain
delivery obligation for responsibility land) and retain
their earnings. Some, but not all, villages give house1
Sometimes, however, the groups can make allocation decisions
on land that is nominally owned by the village. Village leaders, in
turn, are selected by means varying from open, contested elections
to appointment by township authorities.
2
In economics literature, property rights institutions are often analyzed as extending a bundle of specific rights. For example, in the
United States, private ownership, in itself, does not extend the right
to drill for oil, open a public business, put up a big sign, or even
build a house without proper permits.
holds the right to rent land, which also varies among the
four major tenure types.
Collective owners (in practice, village authorities) can
periodically reallocate land-use rights among households. Originally, village authorities allocated land to
farm households according to the number of people in
a household to maintain egalitarian access to land.3
Some villages reallocate land to equalize the distribution of land among households when the demographic
composition of households changes through deaths,
births, and marriages. The frequency, nature, and
magnitude of reallocations vary among villages and
groups (not always for egalitarian reasons), and sometimes without ample notification to households.
Why Does Land Tenure Matter?
Because farm households do not own and cannot sell
their land, they do not necessarily benefit from the
increase in land value that comes as China’s economy
grows and develops. In fact, without clear rights of
ownership, it is unclear exactly who will benefit from
the inevitable increase in the value of land as the
country’s economy grows. Classical economics argues
that the rents to rising land values go to the owners, so
does that mean that the groups and villages that nominally own the land will be the beneficiaries of aggregate economic development? How will those benefits
be distributed to individual farm households that
belong to the collective?
The land-tenure system may prove to be a costly
bottleneck that impedes needed adjustments in China’s
rural economy as it copes with rapid economic change
and globalization. Lack of land markets and frictions
inherent in the land-tenure system slow the transfer of
land from low-value to high-value uses and may
impede needed adjustments in China’s agricultural
sector. The unavailability of land rentals may prevent
3
In some cases, villages also took into consideration the number
of able-bodied workers when making the original land allocations.
38 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Table K-1—Village land-tenure categories in China, 1996
Tenure category
Responsibility land
Ration land
Private land (plots)
Contract land
Other land
Description of tenure category
Land under
tenure category
Villages reporting the
right to rent land in
given category1
Percent of land
Percent of villages
Allocated to households in return for
delivery of grain to state grain bureaus
76
79
Allocated on a per capita basis to provide
the household with food grain security
10
56
Allocated in small parcels for vegetables
and other nongrain crops
4
92
Contracted from a village pool of land, often
through open bidding, by households interested
in expanding their land holdings
9
48
Reclaimed wasteland allocated to households
that participate in the reclamation effort
1
-
1Includes
villages that reported extending the tenure category in question to farm households. For example, only 32 percent of the villages
reported having ration land.
Source: 1996 village survey, reported in Lohmar, 2000, "The Effects of Land Tenure and Grain Quota Policies on Farm Household Labor
Allocation in China," unpublished Ph.D. dissertation, University of California-Davis.
households with successful cash-crop operations from
expanding, especially in villages where leaders seek to
promote the production of staple grains.4 Villages with
successful rural enterprises that need land to expand a
nonagricultural enterprise will work through village
leaders to attain their land, making it less likely that
those households most willing to give up their land
will be chosen for land expropriation. The payments
made to households that do give up their land may or
may not be acceptable reimbursement for the loss to
those households (Guo).
China’s land-tenure system also discourages specialization and free flow of labor. Since land rights are
tied to village residence and delivery of grain quotas,
farm households are discouraged from moving to
towns and cities to find work because they may lose
their land rights. These residency requirements, along
with the urban household registration system, help
explain why most migration in China is temporary and
by individuals rather than entire families. Institutions
established to overcome the conflicts involved in
moving land from agricultural to nonagricultural uses
also often maintain residency requirements. Some
wealthy villages in coastal areas have pooled their land
to establish industrial facilities, allocating shares to the
profits to farm households. These shares, however, are
4
Staple-grain production is often an important part of a village
leader’s performance evaluation.
Economic Research Service/USDA
also tied to village residency and discourage movement out of the village.
Finally, without land ownership, farmers have less
incentive to invest in land improvements and few
assets to secure loans. The risk of reallocation or
tenure insecurity may discourage long-term investments in orchards, forestry, or other projects with
long-term payoffs.5 Limited tenure may also
discourage soil conservation and encourage unsustainable practices with short-term payoffs, such as high
usage of chemicals. Ambiguous property rights may
also encourage the cultivation of marginal or fragile
land that is susceptible to erosion.
How these effects will influence agricultural production
and trade in China is difficult to assess. China will likely
maintain higher levels of grain production under this
tenure system than it would if land could be more easily
transferred. The effects on labor mobility also may
hinder urbanization and with it, maintain relatively high
per capita consumption of staple grains because urban
residents consume less grain than rural residents.
Can Land Be Privatized?
Several factors make it unlikely that China will privatize farmland. The current ownership of land is not
5
Some argue, however, that by making substantial investments
households receive more secure tenure rights.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 39
What We Need to Know
How are land-rental markets and other tenure
institutions developing and what effects will they
have on land use and agricultural productivity?
What effects does the unique tenure system have
on labor and credit markets?
What implications do land-tenure institutions have
for environmental degradation and agricultural
sustainability?
How will land tenure affect urbanization and the
location of industrial facilities?
What new tenure institutions are emerging to
accommodate some of the conflicts outlined
above? How do they work and what are the implications of these new tenure forms?
How does the lack of land ownership affect the
food security of the elderly who can no longer
rely on land assets to fund their retirement?
to promote household tenure security. The law also
aims to reduce the frequency and capriciousness of
land reallocations. Villages and townships in more
developed coastal provinces are independently experimenting with new methods of consolidating collective
land, such as cooperatives, land trusts, and joint-stock
companies where households pool their land to form a
large-scale farm or other operation. Villages are
employing a wide variety of tenure practices, and
those systems that allow for growth while distributing
gains in a politically acceptable way will become
models for future land-tenure reforms.
Further Reading
Brandt, L., G. Li, J. Huang, and S. Rozelle. “Land
Rights in China: A Comprehensive Review of the
Facts, Fictions, and Issues,” University of CaliforniaDavis, REAP Working Paper, February 2001.
Guo, X. “Land Expropriation and Rural Conflicts in
China,” China Quarterly, Vol. 166, June 2001, pp.
422-439.
well defined, and there are already disputes among
villages and village groups over this issue. Lack of a
land registration system, poor credit markets, and a
weak legal system make privatization of land ownership unrealistic, if not dangerous, at the present time
(Brandt). Also, many farmers appear to prefer the
current system, especially in poorer villages, because it
guarantees households access to land (Ho).
Ho, P. “Who Owns China’s Land? Property Rights and
Deliberate Institutional Ambiguity,” China Quarterly,
Vol. 166, June 2001, pp. 394-421.
The framework of China’s existing collective ownership system will likely undergo changes. The latest
land law, passed in 1999, uses much stronger language
to ensure that households are extended 30-year leases
Yao, Y. “The Development of the Land Lease Market
in Rural China,” Land Economics, Vol. 76, No. 2,
2000, pp. 252-266.
Liu, S., M. Carter, and Y. Yao. “Dimensions and
Diversity of Property Rights in Rural China:
Dilemmas on the Road to Further Reform,” World
Development, Vol. 26, October 1998, pp. 1789-1806.
40 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Will Water Scarcity Affect Agricultural
Production in China?
Bryan Lohmar and Jinxia Wang
China has achieved impressive increases in grain
production over the last 50 years due in large part to
the expansion of irrigation, but many observers are
beginning to question whether irrigated agriculture is
sustainable in areas of China where water is relatively
scarce. Despite competition from rapidly growing
industry and increasingly wealthy consumers, farmers
still receive over two-thirds of China’s water, even in
water-stressed regions.
Most observers agree that the increasingly acute water
problems in China will affect agricultural production,
particularly on the north China plain, where irrigation
is extensive but water depletion is severe. Some
scholars have argued that rapid depletion of water
resources will reduce China’s grain production
capacity, leading to massive grain imports that will
dominate world markets. Others argue that a shift to
less water-intensive crops and other measures will help
China solve many of its most pressing water problems,
averting the crisis scenario predicted by others. The
actual changes that take place will depend largely on
the effectiveness of reform policies presently being
discussed and implemented in China.
Does China Have a Water Crisis?
While there is widespread concern that China faces a
water crisis in the future, disruptions in water supplies
to date have been isolated and water is still generally
available at low prices. Industrial production continues
to surge, even in China’s northern coastal regions where
water depletion is most rapid. Ever-wealthier urban
consumers continue to use water with few restrictions
(water rationing has been implemented in some
northern cities during dry years). Farmers also have
maintained access to water at prices well below its
marginal value in agricultural production, which is
much lower than its value in nonagricultural uses. China
has expanded irrigated acreage in recent years and plans
to continue expanding it. To date, there are no indications that water scarcity has significantly affected aggregate agricultural production or economic activity.
Economic Research Service/USDA
Disruptions in water supplies, however, have occurred
in some areas of China and the rapid depletion of both
surface and ground water resources in northern China
has caused many observers to conclude that a far more
serious crisis looms. The most notorious event associated with water overexploitation in China is the
reduced flow of the Yellow River, which failed to
reach the ocean for some period of every year between
1972 and 1999. In the river’s driest year, 1995, it failed
to reach the ocean for over 200 days. Similar reduced
flows have occurred on the Huai and Hai Rivers, the
two other major river basins on the north China plain.
Tributaries of the Hai River often dry up before
connecting to the main stream. Many downstream
users cannot rely on surface water deliveries during the
irrigation season because upstream users deplete water
supplies. Poor maintenance of the existing surface
water systems has resulted in large water withdrawals.
Only about 30 percent of water withdrawals reach the
crop root zone due to conveyance losses and inefficient
irrigation practices (World Bank).
Unreliable and unavailable surface water deliveries
have led to a heavy reliance on ground water. The
combined effects of urban/industrial and agricultural
water withdrawals are rapidly drawing down water
tables on the north China plain. Heavy ground water
withdrawals have caused wells to go dry in some
villages. Private entrepreneurs have raised capital to
sink deeper, more powerful wells, from which they sell
water for a profit (fig. L-1). While this practice maintains irrigated acreage in the short run, it may further
deplete ground water levels.
How Is China Responding?
Water managers and users, from the national level to
the village level, are developing water-saving strategies
and plans to secure future water deliveries. China’s
national government has renewed its commitment to
invest in water storage, delivery infrastructure, and
maintenance. The government has also strengthened
the enforcement of national laws meant to restrict
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 41
Figure L-1
Percentage of private wells, sample villages in
Hebei province, 1980s-1998
What We Need to Know
% of private wells
80
How will increases in water price or water
rationing affect cropping patterns in China?
Which policies to reduce water consumption are
most effective?
69
How does industrial water policy affect water
availability for agriculture?
60
How effective is the extension system for introducing water-saving irrigation technologies and
practices?
44
40
20
What role does poor water quality play in China’s
overall water-scarcity situation?
15
water deliveries to each tiny plot would outweigh the
benefits to be gained from volumetric water pricing.
0
Early 1980s
1990
1998
Effects on Agricultural Production
Note: Primary survey data collected from a sample of villages.
Source: Lohmar et al.
withdrawals from major river basins. Urban and industrial centers are experimenting with reforms to better
rationalize water management and treat more urban
and industrial water runoff so that it can be used for
agriculture. In rural areas, local water managers and
farmers are experimenting with new management
systems intended to improve the reliability of water
deliveries, maintain irrigated acreage, and encourage
water saving.
It is unclear whether policy initiatives and new institutional arrangements will help China avert a severe
water crisis in the future. Because water is of fundamental importance to industry, agriculture, and the
general population’s well-being, government agencies
and managers that oversee water use have substantial
power and clout that they do not want to relinquish.
This factor will make reform of the management infrastructure difficult and politically costly. These costs,
however, are far lower than the costs of running out of
water entirely.
From an economic perspective, pricing irrigation water
on a volumetric basis would increase water-use efficiency in agriculture but would be difficult to implement. With nearly 200 million farm households
cultivating an average of 1.5 acres of land spread
across several small plots, the high cost of monitoring
Increasingly scarce, less reliable, and/or more expensive water is expected to significantly affect China’s
agriculture. Cropping patterns are already being
affected by water scarcity, but only on the margins,
and effects on aggregate agricultural production are
not yet apparent. Of all crops, wheat produced in the
north China plain is the crop most threatened by water
scarcity. Large production increases over the last 40
years are almost entirely due to the introduction of irrigation systems into much of this region, which now
suffers some of the most severe water depletion in
China.1 Many farmers who lack secure access to
ground water are already giving up wheat production
because surface water supplies are not reliable.
Farmers also complain that the low wheat/water price
ratio reduces wheat profitability.
It is difficult to predict how China’s agriculture will
change cropping patterns in response to water scarcity.
Prices, of course, will help determine which crops
become more profitable, but so will research into highyielding and less water-sensitive seed varieties.
Farmers may forgo irrigated wheat and adopt a full
season of corn to achieve high corn yields. Others may
switch from wheat to cotton because cotton yields are
1
Over 70 percent of the rainfall in this region comes between July
and September—after the wheat harvest, but during the corn-growing season. Thus, wheat relies on irrigation, while corn is generally
rain fed.
42 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
less dependent on irrigation. In other areas where
transport costs to urban areas are low and water-saving
irrigation technologies and information is accessible,
farmers may choose to grow high-valued vegetables.
Water Crisis: The Role of Institutions and Policies in
China’s Agricultural Water Management on the North
China Plain, Agriculture Information Bulletin, U.S.
Department of Agriculture, Economic Research
Service, (forthcoming) 2002.
Further Reading
Lohmar, B., J. Wang, S. Rozelle, J. Huang, and D.
Dawe. Investment, Conflicts and Incentives in China’s
Economic Research Service/USDA
World Bank. “At China’s Table: Food Security
Options,” China 2020 Series, World Bank, 1997.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 43
Agricultural Labor:
Where Are the Jobs?
Fred Gale, Agapi Somwaru, and Xinshen Diao
The transfer of labor from agriculture to industry and
service employment that typically accompanies
economic development was stifled in China for many
years. The household registration system instituted in
the 1950s made clear distinctions between rural and
urban residents. Rural residents could not freely move
to urban areas, so there was no outlet for growth in the
rural labor force. When China began its economic
reforms in the late 1970s, nearly all rural residents
were engaged in subsistence farming because there
were few opportunities for rural nonfarm employment.
Rural nonfarm employment has grown rapidly over the
past two decades, but nearly half of China’s labor
force is still engaged in agriculture. Farm earnings are
low because each worker is limited in both land and
capital. In 1999, rural per capita income in China was
just $360, reflecting low earnings in agriculture, which
accounted for 60 percent of rural income.
China’s high agricultural share of employment and low
ratio of land per farm worker are not unusual among
developing countries in Asia. However, middle-income
and developed countries in Asia have 10 percent or
less of their workers in agriculture and ratios of land
per worker are much higher than that of China (table
M-1). To raise per capita output and income in
farming, China’s economy needs to shift large
numbers of farm laborers to employment in industry
and services, where earnings are higher. Creating
nonfarm opportunities will become an even higher
priority as China’s agriculture sector becomes more
integrated with the world economy.
How Many Farmers?
China’s policymakers and planners need better information about rural employment. Until recent years,
“rural” and “agricultural” were essentially synonymous, and the number of farmers could be easily
counted as the number of persons with agricultural
household registrations. However, during the 1990s,
many agricultural people found jobs in cities (though
still mostly illegal) and in growing rural nonfarm
enterprises. The number of people with agricultural
registrations (over 900 million, including children and
retired people) now overstates the farm population.
Estimates of the number of rural people employed in
farming and rural nonfarm industries vary widely. In
2000, official statistics reported a rural agricultural
labor force (including forestry and fishing) of 328
million and a rural nonagricultural labor force of about
170 million (table M-2). In a 1998 paper, Rawski and
Table M-1—Agricultural labor force share and land per
worker, selected countries and regions, 1999
Country/region
Laos
Cambodia
Vietnam
Africa - developing
India
Thailand
Bangladesh
Indonesia
Pakistan
China2
Sri Lanka
Philippines
Mexico
Latin America and Caribbean
Malaysia
South Korea
Europe
Taiwan2
Australia
Japan
Canada
United States
Agricultural
share of
labor force
Land per
agricultural
worker1
Percent
Hectares
76
70
67
60
60
56
56
48
47
47
46
40
21
20
19
10
9
8
5
4
2
2
.44
.82
.21
.83
.61
.70
.21
.36
.87
.39
.23
.45
2.84
3.02
1.03
.71
9.36
1.10
107.34
1.63
116.82
58.46
1 Arable/cultivated
land divided by agricultural employment.
Computed from statistical yearbook data. China agricultural
employment reported in FAOSTAT is much higher than reported
in China Statistical Yearbook.
2
Source: ERS calculations based on data from United Nations Food and
Agriculture Organization, FAOSTAT database, except where noted.
44 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Table M-2—China employment and growth by sector,
1990-2000
Sector
Employment
2000
Growth
1990-2000
Million
Agriculture, forestry, and fishing
Rural township and village enterprises
Rural private enterprises
Rural self-employment
Urban employment
328
128
11
29
213
-5
35
10
14
47
Total
710
101
From 1990 to 2000, urban areas provided 46 percent
of China’s employment growth—much higher than
their 30-percent share of the country’s population in
1990. According to China’s 1997 agricultural census,
40 percent of rural residents working in nonagricultural activities worked in urban areas. Thus, much of
the labor moving out of agriculture will likely find
jobs in urban areas. As economies develop, most
employment growth is in service sectors, and these
jobs tend to cluster in urban areas, especially large
cities, which are geographic centers for trade and incubators for high-tech industry. Labor-intensive low-skill
services will be a logical sector for absorption of
China’s rural labor force. Manufacturing industries in
both rural and urban areas will be under pressure to
keep labor costs competitive and increase capital, skill,
and productivity per worker. Textile manufacturers, an
important employer of rural labor, have already undergone significant consolidation and downsizing.
Note: Components do not sum to total due to rounding.
Source: China National Bureau of Statistics, China Statistical Yearbook
2000 and China Statistical Abstract 2001.
Mead argued that official statistics published in
China’s statistical yearbooks underestimate rural
employment in nonfarm industries and overestimate
farm employment by perhaps 100 million. However,
China’s 1997 agricultural census, the first attempt to
obtain a comprehensive nationwide count of rural
employment, reported an even larger number of 425
million persons primarily employed in agriculture,
forestry, and fishing and 136 million rural persons
employed in nonagriculture (including 57 million
working primarily in urban areas).
Where Are the Jobs?
China faces an enormous task in moving labor out of
agriculture. Johnson estimated that China would need to
create 15 million jobs per year over three decades to
reduce its farm employment to 10 percent of the labor
force (about the level of South Korea and Taiwan). This
rate is nearly three times the average 5.9 million workers
per year that transferred from agricultural to nonagricultural activities from 1978 to 2000, according to China’s
National Bureau of Statistics. A 20-percent agricultural
labor force share (similar to that of Malaysia) is probably more realistic but would also require China to
accelerate job growth over current rates.
Rural job growth faces a number of challenges (see
“Can Rural Income Growth Accelerate?” in this
report). Rural township and village enterprises (TVE)
have absorbed much farm labor but are now trying to
raise productivity and workforce quality, which tends
to reduce hiring. TVE employment grew by 35 million
during the 1990s but fell by 7 million from 1996 to
2000. Private enterprise and self-employment in rural
areas added 24 million jobs during the 1990s but still
account for less than 10 percent of rural employment.
Economic Research Service/USDA
Because population growth adds more people to the
rural labor force each year, any effort to shrink China’s
farm labor force will be difficult. The creation of 57
million rural nonfarm jobs during the 1990s decreased
farm employment by only 5 million from 1990 to
2000. The aging of the rural labor force presents
another obstacle to nonfarm job growth because older
persons are less likely to enter off-farm employment
than younger persons.
Institutional Reforms May Aid Mobility
Studies of rural migration in China find that migration
tends to follow networks established by village
members. Migration is largely temporary, circular, and
over short distances. Migrants tend to be young
unmarried adults who are members of households with
limited farmland. Remittances sent home by migrants
are an important source of capital for rural households.
While mobility of rural labor has increased at a rapid
pace, it is still constrained by limits on urban migration, grain procurement obligations and land-tenure
systems, and lack of rural credit markets (see “Does
China’s Land-Tenure System Discourage Structural
Adjustment?” in this report). As China relaxes some of
these barriers to migration, what we know about
migration from previous studies may become outdated.
Who Will Stay Behind?
Increased education will make China’s rural workers
more productive and employable. Rural education
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 45
What We Need to Know
Will nonfarm labor demand grow fast enough to
absorb farm workers and reduce the agricultural
labor force?
Will new jobs be in rural or urban areas?
Will long-distance and permanent migration
become more common?
Which workers will be most likely to participate
in nonfarm work?
How will labor productivity, earnings, and the
structure of the agricultural sector be affected
by outmigration?
levels have increased dramatically since the 1950s,
especially for women, but many observers believe
rural schooling levels are now in decline. Rural local
governments must fund their own schools, and many
poorer areas have little resources to support education.
Rural residents view schooling as a means to migrate
to an urban job. In other Asian countries, rural residents see better educational opportunities in urban
areas as an important motive for moving to cities.
Studies of the impact of education on farmer productivity have found mixed results. Persons with the
highest level of education and skill are the most likely
to enter nonagricultural work, leaving the less skilled
in farming. However, a general rise in rural education
seems likely to improve the ability of farmers to
understand and adopt new technologies and process
market information.
Part-time farming in China is becoming much more
prevalent as farm household members commute to offfarm jobs. New institutional innovations in land tenure
may allow farm households to maintain “ownership”
of their land while devoting their labor to nonfarm
work. In Taiwan, for example, over 80 percent of farm
households have at least one member working offfarm. The fairly uniform distribution of small land
plots among farm households in China may become
more skewed as labor migration and consolidation of
land occurs in some villages. Marketing arrangements
and contract production for processors that need steady
supplies of uniform products are becoming more
common, which may speed up the commercialization
and modernization of farming in China, turning “peasants” into modern farmers.
Further Reading
Johnson, D.G. “Agricultural Adjustment in China:
Problems and Prospects,” Population and Development Review, Vol. 26, 2000, pp. 319-334.
Rawski, T.G., and R.W. Mead. “On the Trail of
China’s Phantom Farmers,” World Development,
Vol. 26, 1998, pp. 767-781.
Rozelle, S., L. Guo, M. Shen, A. Hughart, and J. Giles.
“New Paths and Remaining Hurdles to Rural Migration,” China Quarterly, Vol. 158, June 1999, pp.
367-393.
Solinger, Dorothy J. Contesting Citizenship in Urban
China: Peasant Migrants, the State, and the Logic
of the Market, University of California Press, 1999.
46 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Can Rural Income
Growth Accelerate?
Fred Gale and Albert Park
Since the beginning of rural economic reforms in the late
1970s, rural incomes and living standards in China have
improved dramatically, most notably during the early
1980s when productivity increased rapidly following the
return to family farming. Real rural per capita incomes
were nearly six times higher in 2000 than in 1978 (fig.
N-1). However, income growth began from a very low
base, and was uneven over time. Urban incomes grew
even faster over the reform period, and China now has
one of the largest urban-rural income disparities on
record anywhere. According to China’s official statistics,
rural incomes in 2000 were only 36 percent of urban
incomes on average, compared with 77 percent in the
United States. The growing urban-rural gap is partly
attributable to policies historically biased in favor of
urban areas, such as extractive rural procurement and
taxation policies, biased investments, and a strict resident
permit system that clearly divided urban and rural populations. The gap also is the result of rapid industrial
growth in urban areas and restrictions on labor mobility
Figure N-1
Urban and rural real per capita income, 1978-2000
Yuan (1,000)
7
6
5
4
3
Urban
2
Rural
1
0
1978
81
84
87
90
93
96
99
Note: Deflated and converted to 2000 RMB yuan using
China's Consumer Price Index.
Source: China Statistical Yearbook and China Rural Househould
Survey Yearbook 2000.
Economic Research Service/USDA
that have prevented rural workers from benefiting fully
from that growth.
As China enters the new century, there is growing
concern about whether the country can maintain
momentum in increasing rural productivity and incomes.
These concerns are punctuated by slow rural income
growth in the late 1990s, the recent decline in employment in rural industry, and concerns that China’s entry
into the World Trade Organization (WTO) will weaken
the country’s agriculture. The recent relative stagnation
of rural incomes in comparison with urban incomes
highlights the importance of taking active steps to stimulate rural income growth. If effective, such steps will
affect not only the welfare of millions of Chinese citizens but also the structure and competitiveness of the
country’s agriculture and trade.
Supporting Structural Change
As a developing country, China is in the midst of rapid
structural transformation, a process that will likely
accelerate with WTO entry. Although two-thirds of
China’s population still live in rural villages and agriculture still accounts for the majority of rural income, the
country continues to rapidly urbanize and the share of
labor and output accounted for by agriculture continues
to fall steadily. Increases in productivity per rural
worker and growth in per capita incomes will require
accelerating this process of transferring agricultural
labor to nonagricultural jobs, as well as making appropriate complementary investments to raise labor productivity in agriculture (see “Agricultural Labor: Where Are
the Jobs?” in this report).
China will be challenged to generate new jobs to draw
labor out of agriculture. Employment in rural enterprises has fallen in recent years, reflecting the difficulties such enterprises have faced due to intense
competition, slower overall growth, and poor credit
access. Many cities have severe unemployment problems associated with painful enterprise restructuring
that may limit their ability to absorb rural labor.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 47
Foreign competition after China’s WTO accession may
put further pressure on enterprises to minimize labor
costs to remain competitive, dampening employment
growth. On the positive side, in recent years China’s
small private sector has been the largest generator of
new jobs in urban areas, and this labor-intensive sector
stands to benefit from more open trade. Thus, policies
that support private enterprises and promote more
open labor markets could help create more jobs for
rural surplus farm labor. On the supply side, reforms
of the land-tenure and grain-quota systems that now tie
rural people to the land could significantly increase the
mobility of rural labor (see “Does China’s LandTenure System Discourage Structural Adjustment?”
in this report).
Modernizing Agriculture
Another aspect of raising rural labor productivity is
modernizing agriculture, transforming it from traditional semi-subsistence household production to larger
scale, more commercialized and specialized production, especially in export-competitive sectors, such as
the production of horticultural products, fruit, and livestock. The government should encourage policies that
increase the ratio of land and capital per worker and
allow farmers to realize economies of scale (e.g.,
consolidate small plots, promote mechanization).
Rural financial institutions must provide financing for
necessary capital purchases, which could be facilitated
by land reforms that allow farmers to collateralize land
ownership or use rights.
The most direct way to increase agricultural productivity
is through investments in agricultural research, for which
most agree there are high potential returns. China’s agricultural research system has provided important breakthroughs but needs increased funding. Higher yields will
also help China meet its food security goals in an era of
more open trade. During the reform period, agricultural
productivity growth has had the broadest impact on
raising rural incomes and alleviating poverty. Another
key aspect of raising rural productivity is increasing
investments in rural infrastructure, which still accounts
for a very low share of government expenditures (see
“How Might China Protect Its Agricultural Sector?” in
this report). Part of the necessary infrastructure investments are those that make land use more sustainable
over time, especially in China’s interior regions. The
Western Development initiative may help reverse the
urban bias in rural investment.
Developing agricultural processing and vertical coordination in the supply chain could play a role in promoting
capital investment and technology transfer in rural
China. Contract arrangements with processors can help
farmers obtain loans, modern inputs, and technical assistance. New investment and trade opportunities after
China’s WTO accession could help support such vertical
linkages. China’s government structure must be adjusted
to coordinate vertically linked production activities that
involve both agriculture and industry.
Educational Access and Quality Uneven
In a world of increasing globalization and technological
sophistication, investments in human capital become
increasingly important, especially when workers,
whether in agriculture, industry, or services, switch jobs
frequently in response to changes in economic structure
or in the international trading environment. In China, the
returns to education have continued to rise over time,
especially in the nonagricultural sector, and this will
continue as the labor market becomes more developed.
Primary education has become nearly universal in
China’s rural areas and China’s Education Ministry is
committed to raising school effectiveness and to
achieving universal minimums of 9 years of education
for the population. However, institutional inertia is
strong, and budget shortages, fiscal decentralization, and
rising regional income inequalities have led to growing
inequities in educational access and school quality,
leaving the poor and minority populations particularly
vulnerable.
Limited Access to Capital
Although China’s financial system has become more
commercially oriented in recent years, rural financial
institutions are still hampered by restrictions on interest
rates, lending, and borrowing that constrain their institutions’ ability to provide ready credit access to rural enterprises and farmers. Studies have documented how
financial reforms in the mid-1990s made borrowing
more difficult for both enterprises and households.
Credit is important for facilitating the purchase of necessary capital to start new ventures or expand existing
businesses, and thus is critical for realizing rapid structural adjustment in response to shifting comparative
advantage. Rural finance supports more capital-intensive
agricultural production and rural enterprise growth, both
essential aspects of raising rural labor productivity.
Interest rate liberalization would likely increase available
funds for rural households, although at a higher price,
48 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
How will migration and urbanization affect the
agricultural sector?
low skills, and poor infrastructure will pose significant
challenges in creating jobs in new small towns in central
and western regions. China will need to allow population to move freely in response to incentives rather than
fully plan the urbanization process.
What are the payoffs to rural infrastructure
investments?
Taxation and Governance
What We Need to Know
How can village governance be reformed to maintain stability in the countryside?
How flexibly can China’s rural economic structure
adapt to new market opportunities and competition in a world of more open trade?
and would provide higher returns to savings, which
are another key source of finance for new projects.
Improving bank governance and management in rural
financial institutions also should be a priority to increase
available funds by reducing nonperforming loans.
Innovative microfinance programs are expanding loan
access to some of the rural poor, but only on a very
small scale. Foreign bank entry following China’s WTO
accession is unlikely to lead quickly to direct foreign
bank lending to rural households, but greater financial
competition should benefit private, labor-intensive enterprises and reduce the share of state bank lending to
state-owned enterprises, potentially freeing up funds
for rural lending.
Urbanization Will Increase
China’s degree of urbanization is lower than would be
expected given its level of economic development, probably as a result of strict controls on population movement. Cities are important for realizing the advantages
of agglomeration, such as economies of scale, concentrated markets, and greater specialization in production.
Because earlier policies restricted rural-urban migration
and supported inefficient, relatively capital-intensive
enterprises in cities, much of China’s industrial employment growth was in rural enterprises. However, in the
future more rural labor is likely to migrate to cities, and
China will need to find ways to accommodate more
urban migrants. Chinese authorities project a 50-percent
urban share of population within the first two decades
of the 21st century. To facilitate this process, the
Chinese government seeks to channel the rural-urban
migration stream into small towns and small cities. The
government has promised investments in such towns
and cities and recently announced the relaxation of its
strict resident permit (hukou) system in such areas.
However, distance from markets, lack of technology,
Economic Research Service/USDA
Excessive taxation of farmers through ad hoc fee and
tax assessments remains a significant problem in many
rural areas, occasionally leading to farmer protests. To
adequately meet local development needs, local
leaders need discretionary authority to tax and spend,
especially when fiscal authority and responsibility
have been decentralized. But discretion is easily
abused without accountability, and governments in
poor areas with few revenue sources have little
recourse but to tax farmers to pay wages. For this
reason, reform of rural local government institutions
and public finance has become one of the most
pressing issues in China’s rural development. Upper
levels of government must take measures to ensure
adequate budgetary resources for poorer regions.
Whether through village elections or through other
forms of participatory decision-making, reform efforts
to incorporate local voices into government decisions
deserve high priority.
Further Reading
Bernstein, Tom, and Xiaobo Lu. “Taxation Without
Representation,” China Quarterly, Vol. 163, September 2000, pp. 141-156.
Gale, Fred, and Hongguo Dai. “Small Town Development in China: A 21st Century Challenge,” Rural
America (forthcoming), 2002.
Johnson, D. Gale. “Agricultural Adjustment in China:
Problems and Prospects,” Population and Development Review, Vol. 26, June 2000,
pp. 319-334.
_______. “China’s Agriculture and WTO Accession,”
Office of Agricultural Economics Research, University of Chicago, Paper No. 00-02, June 2000.
Nyberg, Al, and Scott Rozelle. Accelerating China’s
Rural Transformation, The World Bank, 1999.
Park, Albert. “Trade Integration and the Prospects for
Rural Enterprise Development in China,” China’s
Agriculture in the International Trading System,
Organisation for Economic Cooperation and Development, 2001.
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 49
China’s Statistics: Are They Reliable?
Fred Gale
Analysis of China’s economy is made more challenging by the uncertain accuracy of the country’s official statistics. The politicization of statistics, reliance
on bottom-up administrative reporting, use of nonstandard definitions, and parallel reporting systems in
multiple agencies often make Chinese statistics
confusing and potentially misleading. Many analysts
believe that macroeconomic statistics overstate
economic growth and understate unemployment.
Bilateral trade statistics with the United States and
Europe have had large discrepancies. For a number of
years, agricultural statistics understated cultivated land
area by 40 percent and overstated livestock inventory
and output. In 2001, Canadian fisheries biologists
argued that China’s fish catch statistics were overstated, distorting the trend in world fish populations.
China’s official statistical agency is the National
Bureau of Statistics (NBS, formerly called the State
Statistical Bureau). Like the U.S. Census Bureau, NBS
conducts population censuses and periodic censuses of
industry and governments. NBS conducts annual
surveys of urban and rural households and reports
China’s national accounts and industrial and agricultural statistics. NBS conducted China’s first modern
agricultural census in 1997. Other agencies and statesponsored agribusiness entities have their own statistical reporting capabilities for policy and business
purposes, but NBS is the official source for most
national statistics.
NBS publishes major statistical series in its annual
China Statistical Yearbook. More detailed agricultural
and rural statistics are published in NBS’s annual
Rural Statistical Yearbook and Rural Household
Survey Yearbook, and County Social and Economic
Statistical Yearbook. China’s Ministry of Agriculture
(MOA) publishes an annual Agricultural Yearbook
that contains data on some commodities that NBS
does not cover. NBS also publishes yearbooks for
urban household surveys, prices, population, labor,
township and village enterprises, and various industries. Monthly trade statistics are published by China’s
customs administration.
Agricultural Statistics
In China’s Soviet-style bureaucracy, which was
installed after 1949, statistics were gathered through
bureaucratic administrative reporting. (Modern probability-based statistical survey methods have only
recently been reintroduced in China.) Statistics became
an integral part of the planning process and the
rewards system. Rigid hierarchies were established for
managing each aspect of the economy, and targets and
quotas were handed down from the central government
in Beijing to provincial authorities, to counties, to
cities and townships, and to villages. At the end of the
year, reports of production, income growth, crop
yields, and other items were handed back up through
the bureaucracy, and these reports, once aggregated,
became the country’s statistics. Officials at each level
had incentives to pad the statistics to reach their targets
or to avoid handing over taxes, procured commodities,
or other obligations that are based on production,
population, or other numbers. In recent years, many
observers speculated that provincial statistical bureaus
were exaggerating economic growth numbers to
ensure that they met targets set by central authorities.
It was widely reported that NBS did not have confidence in provincial numbers and reported national
growth rates below rates reported by the provinces.
In recent years, international organizations and foreign
governments have provided considerable technical
assistance to help NBS modernize and improve its data
collection and reporting capabilities in agricultural and
other statistics (Food and Agriculture Organization;
NBS). NBS is integrating sample surveys with traditional bottom-up complete reporting system. NBS and
MOA each have a parallel complete reporting system
that was put into effect when China was a centrally
planned economy (Vogel). Village heads provide their
township (the next administrative level) with estimates
of basic data, such as household numbers, labor force,
crop planted area, yields, and livestock numbers.
Townships compile the data and report them to county
statistical offices, which send the data to provincial
offices. National totals are aggregated by NBS or
MOA in Beijing. The accuracy of the complete
50 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
reporting system depends on the initial accuracy of the
village head’s report. Data on individual farms or
households are not available to higher level statisticians to check for accuracy.
In 1997, NBS conducted China’s first agricultural
census, enumerating over 200 million rural households,
as well as nonhousehold farm operations, administrative villages, towns, and townships. The census
provided benchmark data (for 1996) on cultivated area,
sown area to crops, livestock numbers, labor force, and
other basic data that will be used to improve annual
survey work (NBS). The agricultural census provided a
more accurate estimate of cultivated land, which had
been underreported for years (presumably to boost
reported yields). Estimates of cultivated land area went
from 95 million hectares (pre-census) to 130 million
hectares (post-census). Similarly, China overreported
livestock estimates until the census was taken. NBS
now reports its livestock series beginning in 1996 (the
year for census data), and cultivated land is reported
only for 1996. It is still uncertain whether planted area
is measured accurately (Vogel). At the local level, there
are varying standards for measuring a mu, the traditional Chinese measure for land area (15 mu = 1
hectare = 2.471 acres), and it is difficult to verify the
number of small land parcels in terraced areas.
Less Control, Less Accuracy
In most cases, China’s statistics are becoming more
reliable as modern survey methods are implemented.
However, as the government’s tight control over the
population loosens and more of the economy moves
toward privatization, the accuracy of many statistics is
being challenged. Some observers question the accuracy of China’s 2000 population census because of
reports that many illegal migrants, unregistered children, and others evaded census takers (Becker).
Rawski suggested that employment statistics undercount employment in tertiary industries, where a large
share of employees are illegal migrants. More efforts
are now being made to collect employment statistics
from small firms—such as tertiary businesses—which
were often left out of commercial and industrial statistics, which historically were collected from large stateowned enterprises.
As China’s economy has become liberalized, the accuracy of bottom-up reporting systems for agricultural
statistics has declined because leaders have less
detailed knowledge of individual households than they
Economic Research Service/USDA
did when government control over farmers was tighter.
Increased competition in agricultural markets, which
may accelerate as a result of China’s WTO accession,
is reducing government control of agricultural procurement and marketing. The government grain bureau,
cotton procurement, and other monopolies have been
important sources of statistical information, but new
ways of counting commodities in the supply pipeline
will be needed as these monopolies erode.
“State Secrets” Keep Analysts in the Dark
Historically, Chinese authorities have kept secret
market information that was available only to privileged government officials. Data on stocks of grain,
oilseeds, cotton, and other major field crops held in
China are not publicly available and are considered to
be a state secret. Information about on-farm stocks is
collected by NBS surveys, and information about
commercial and government stocks is collected by the
grain bureau system and agricultural development
banks, but these data are not published. USDA and the
United Nations Food and Agriculture Organization
publish estimates of China’s grain stocks, but those
estimates are based on minimal information and are
limited in detail. Gradually, China’s government is
making more neibu (internal use only) information
available to the public, and the country’s WTO accession commitments will mandate publication of even
more information.
Duplicative reporting systems in different agencies
create uncertainty for market analysts. For example,
multiple agencies report their own production estimates for important crops, such as grain and cotton,
and the estimates from different agencies are often
inconsistent. Publication of data from the agricultural
census was delayed for many months while the census
estimates of land area were reconciled with contradictory estimates from other sources. NBS and MOA
have parallel reporting systems and surveys. Some
villages are covered by both agencies’ surveys, while
others are not. Greater interagency cooperation and
reconciliation of differing estimates among agencies
would improve the reliability of China’s statistics.
Trade Statistics Discrepancies
Discrepancies between U.S. and Chinese statistics on
bilateral trade were widely discussed in the early
1990s, when each country claimed to have a trade
deficit with its counterpart. Since then, the statistics of
both countries have shown the same trend—rapid
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 51
What We Need to Know
Will survey methods adequately replace bottomup reporting systems?
Will greater transparency requirements after WTO
accession improve the flow of information?
Will different organizations find means of sharing
and reconciling data?
How much do distortions in the economy affect
statistical measures of purchasing power?
growth in China’s exports to the United States—but
discrepancies remain.
is produced at home or by informal labor; thus it may
not be captured by income or spending statistics.
The concept of purchasing power parity (PPP) is used
to improve cross-country comparability of incomes
(Chen, Gordon, and Yan). The World Bank’s PPP estimate of China’s gross domestic product (GDP) per
capita for 1999 was $3,940, much larger than the official estimate of $840 and probably a more accurate
reflection of Chinese purchasing power. As China
develops, reforms its socialist welfare system, and
becomes more integrated with the world economy,
many of these distortions are becoming less serious as
health care, housing, and other goods and services are
marketized and subsidies are reduced or abandoned.
Further Reading
The largest discrepancies are due to differences in
counting China’s exports to the United States via third
countries or regions, mostly Hong Kong. In the early
1990s, the U.S. Census Bureau estimated that such transshipments constituted 80 percent of U.S. imports from
China (China claimed the figure was 60 percent). The
United States counts Chinese goods transshipped
through Hong Kong as imports from China. The Chinese
argue that the value added to goods in the “third place,”
estimated at 29 percent of import value (Dougherty),
should not be counted as imports from China.
U.S. exports to China are also transhipped through
third countries, but there is less discrepancy in export
statistics because only about 25 percent of U.S.
exports go through a third country or region. Another
important conceptual difference between the two
countries is that U.S. statistics include costs of shipping in exports, while China’s do not. Some trade is
not covered by statistics due to errors, misclassification, underinvoicing, or smuggling, which also leads
to discrepancies.
Is Income Really That Low?
Per capita income figures converted to U.S. dollars with
the official exchange rate usually understate the actual
purchasing power of China’s consumers. Urban
consumers often receive subsidized health care,
housing, utilities, education, and other services that are
not counted in their incomes. Taxes are not paid directly
by most urban residents, and prices for many items are
much lower than in other countries. Much of the food,
housing, and services consumed by the rural population
Becker, Jasper. “Evasive Citizens Throw Wrench in
Census Results,” South China Morning Post, March
29, 2001 (transcribed by Foreign Broadcast Information Service).
Bramall, Chris. “The Quality of China’s Household
Income Surveys,” China Quarterly, Vol. 167, September 2001, pp. 689-705.
Chen, Haichun, M.J. Gordon, and Zhiming Yan. “The
Real Income and Consumption of an Urban Chinese
Family,” The Journal of Development Studies, Vol.
31, October 1994, pp. 201-213.
Colby, W. Hunter, Frederick W. Crook, and Shwu-Eng
H. Webb. Agricultural Statistics of the People’s
Republic of China, 1949-90, Statistical Bulletin
844, U.S. Department of Agriculture, Economic
Research Service, December 1992.
Dougherty, Sean. “The Reliability of Chinese Statistics,” Report to U.S. Department of Commerce
office in Beijing, November 1997, Reprinted by
ChinaOnline, http://www.chinaonline.com/refer/statistics/secure/us_prc.asp
Food and Agriculture Organization. Proceedings of the
International Seminar on China Agricultural Census Results, Beijing, September 2000.
Information Office of the State Council of the People’s
Republic of China. “On Sino-US Trade Balance,”
White Paper of the Government, Beijing, March
1997, http://english.peopledaily.com.cn/whitepaper/16.html
52 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
National Bureau of Statistics. “International Meeting
on Technical Cooperation: Look to the Future for
Chinese Statistics,” December 2001, http://www.
stats.gov.cn/nbsimf/ennew/200112100074.htm
neous Publication No. 1556, U.S. Department of
Agriculture, National Agricultural Statistics Service,
June 1999.
Rawski, Thomas. G., and Robert W. Mead. “On the
Trail of China’s Phantom Farmers,” World Development, Vol. 26, 1998, pp. 767-781.
Vogel, Frederic A. Review of Chinese Crop Production
Forecasting and Estimation Methodology, Miscella-
Economic Research Service/USDA
Walter, Bruce C., and Diane C. Oberg. “Comparison of
the 1992-1993 Merchandise Trade Statistics of the
United States and the People’s Republic of China,”
U.S. Department of Commerce News, undated,.
http://www.census.gov/foreign-trade/reconcile/
china.html
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 53
Appendix table 1—China, basic economic statistics, 2000
Item
Unit
Number
Population1
Percent urban
Percent rural
Under age 14
Age 65 and over
Population, projected, 20102
Population, projected, 20502
Billion
Percent
Percent
Percent
Percent
Billion
Billion
1.27
36
64
23
7
1.4
1.5
Education level:
Illiterate or semiliterate
Primary school (1-6 years)
Lower middle school (7-9 years)
High school (10-12 years)
College or vocational school
Percent
Percent
Percent
Percent
Percent
7
36
34
11
4
Labor force
Urban
Agriculture, forestry, fishing
Rural
Agriculture, forestry, fishing
Million
Million
Million
Million
Million
712
213
6
499
328
Gross domestic product
Per capita
Agricultural share
Trillion dollars
Dollars
Percent
1.07
856
15
Total exports
Total imports
Exchange rate
Billion dollars
Billion dollars
Yuan per dollar
249
225
8.28
Average annual salary per
employed worker3
Per capita income:
Rural
Urban
Average annual food
expenditures:
Rural
Urban
Dollars
1,143
Dollars
Dollars
272
758
Dollars
Dollars
99
237
1
Does not include Hong Kong or Macao.
U.S. Census Bureau projections.
3 Excludes farmers and self-employed.
2
Source: China National Bureau of Statistics, China Statistical
Abstract, 2001.
Appendix table 2—China, basic agricultural statistics,
2000
Item
Unit
Number
Total land area
Cultivated land area1
Sown land area
Irrigated area
Usable grassland
Forest area
Inland water surface area
Million hectares
Million hectares
Million hectares
Million hectares
Million hectares
Million hectares
Million hectares
9,600
130
156
54
313
159
17
Value of output:
Agriculture, forestry,
and fishing
Crops
Livestock
Forestry
Fishing
Billion dollars
Billion dollars
Billion dollars
Billion dollars
Billion dollars
301
168
89
11
33
Crop production:
Rice paddy
Wheat
Corn
Beans
Tubers
Cotton
Peanuts
Rapeseed
Sugar crops
Tobacco
Fruit
Million tons
Million tons
Million tons
Million tons
Million tons
Million tons
Million tons
Million tons
Million tons
Million tons
Million tons
188
100
106
20
37
4
14
11
76
26
62
Animal products output:
Pork
Beef
Mutton
Poultry and other meats
Eggs
Milk
Wool
Fresh water aquaculture
Seafood
Million tons
Million tons
Million tons
Million tons
Million tons
Million tons
Thousand tons
Million tons
Million tons
40
5
3
13
23
9
293
17
25
Employment in agriculture,
forestry, and fishing
Fertilizer use
Million
Million tons
334
41
1 1997.
Source: China National Bureau of Statistics, China Statistical
Yearbook, 2001.
54 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Appendix table 3—Value of China's major agicultural exports, 1995-2000
Item
1995
1996
1997
1998
1999
2000
Million dollars
Live animals
Swine
Poultry
503
278
125
487
294
121
476
302
114
441
291
96
385
237
99
385
232
104
Meat
Pork
Poultry
1,021
245
621
1,086
215
691
963
195
608
839
180
523
692
67
539
754
69
587
Fish and seafood
Dairy, eggs, and honey
Other animal products
Live trees and plants
Vegetables
Edible fruit and nuts
Citrus
Apples
2,087
162
711
28
1,713
480
60
45
1,738
195
678
30
1,542
461
67
69
1,886
165
699
32
1,510
464
76
77
1,732
175
648
29
1,474
433
48
65
1,949
164
622
31
1,521
426
42
76
2,271
188
757
32
1,545
417
47
97
Spices, coffee, and tea
Tea
465
275
492
283
547
332
520
370
491
339
506
347
Cereals
Corn
Rice
Milling products
Wheat flour
76
13
16
101
55
187
30
112
218
158
1,174
856
265
186
125
1,497
532
927
106
74
1,135
450
652
80
46
1,639
1,047
561
93
45
Oilseeds and miscellaneous grain
Soybeans
Peanuts
1,170
100
257
1,056
66
254
868
73
137
752
63
156
806
62
195
877
64
232
Lac, vegetable sap, extract
Other vegetables
Fats and oils
Prepared meat, fish
Sugar
Cocoa
Baking products, prepared
Preserved food
Miscellaneous food
Beverages
Beer
45
61
459
1,116
234
41
211
1,083
216
391
53
50
52
382
1,470
305
49
235
1,047
251
397
32
61
50
681
1,384
194
56
270
1,043
303
465
34
54
45
324
1,212
183
44
262
1,022
327
450
26
45
40
141
1,386
140
40
291
1,127
337
457
30
47
43
129
1,882
173
29
360
1,315
359
494
40
Food waste, animal feed
Tobacco
Fertilizers
Rubber
Hides and skins
Silk yarn and fabric
Animal hair yarn and fabric
336
999
130
746
395
1,173
773
347
976
207
832
295
894
819
276
656
212
955
355
945
993
189
577
156
1,006
366
751
759
215
336
230
1,177
361
755
965
253
30
323
1,561
544
928
1,202
Cotton yarn and fabric
Cotton, raw
3,850
47
3,158
12
3,116
3
2,810
56
3,292
283
3,730
305
20,776
19,936
20,985
19,183
19,637
23,138
Total
Source: China customs statistics.
Economic Research Service/USDA
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 55
Appendix table 4—Value of China's major agicultural imports, 1995-2000
Item
1995
1996
1997
1998
1999
2000
Million dollars
Live animals
Meat
Pork
Poultry
Fish and seafood
Dairy, eggs, and honey
Other animal products
Live trees and plants
Vegetables
Edible fruit and nuts
Bananas
Grapes
Spices, coffee, and tea
Coffee
37
95
1
80
599
64
72
6
78
84
42
3
15
6
47
157
1
140
597
57
95
5
77
197
141
4
28
17
41
148
2
129
543
67
114
8
74
235
146
5
10
3
54
143
8
108
667
89
98
11
71
242
163
4
20
11
66
499
24
410
882
164
112
17
83
258
140
24
19
8
52
637
58
481
1,212
218
158
21
82
368
169
35
23
6
Cereals
Wheat
Barley
Rice
Milling products
Wheat flour
Oilseeds and miscellaneous grain
Soybeans
Rapeseeds
Lac, vegetable sap, extract
Other vegetables
Fats and oils
Palm oil
Soybean oil
Rapeseed oil
Prepared meat, fish
Sugar
Cocoa
Baking products, prepared
Preserved food
Miscellaneous food
Beverages
Beer
Food waste, animal feed
Tobacco
Fertilizers
Rubber
Hides and skins
Silk yarn and fabric
Animal hair yarn and fabric
3,582
2,026
241
434
72
10
187
75
26
27
90
2,623
865
1,024
413
12
935
59
23
15
66
37
4
420
259
3,742
985
2,251
176
1,656
2,555
1,890
304
286
71
14
412
320
0
21
40
1,695
527
764
187
8
428
59
17
16
85
42
18
1,298
457
3,563
1,432
2,359
157
1,536
889
368
382
138
68
16
989
843
16
21
33
1,653
603
666
197
8
254
71
16
18
87
68
14
1,785
254
2,995
1,245
2,496
176
1,545
696
279
241
120
55
15
1,344
804
402
19
43
1,487
592
521
175
6
177
64
15
24
83
75
21
1,402
106
2,518
1,115
2,254
139
1,177
497
86
294
78
79
17
1,639
890
628
29
48
1,359
597
421
38
12
182
53
48
43
118
123
63
619
88
2,248
1,469
2,330
124
1,265
574
147
313
113
64
15
3,072
2,270
658
34
83
1,023
456
126
28
12
182
71
71
60
147
161
93
907
204
1,730
1,906
2,954
138
1,831
Cotton yarn and fabric
Cotton, raw
3,360
1,378
3,530
1,196
3,732
1,330
2,584
332
2,357
67
2,789
74
23,005
22,237
20,973
17,110
16,897
20,858
Total
Source: China customs statistics.
56 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
Appendix table 5—U.S. exports of agricultural, fish, and forestry products to China, 1995-2000
Item
1995
1996
1997
1998
1999
2000
Thousand dollars
Bulk agricultural total
2,026,726
Wheat
499,791
Coarse grains
638,278
Rice
63
Soybeans
50,657
Cotton
836,657
Tobacco
767
Pulses
123
Peanuts
6
Other bulk commodities
383
Intermediate agricultural total
539,756
Wheat flour
14
Soybean meal
76
Soybean oil
341,264
Vegetable oils (excluding soybean oil)
14,125
Feeds and fodders (excluding pet foods)
8,142
Live animals
9,364
Hides and skins
100,145
Animal fast
39,178
Planting seeds
10,671
Sugars, sweeteners, and beverage bases
931
Other intermediate products
15,846
Consumer-oriented agricultural total
67,156
Snack foods (excluding nuts)
7,432
Breakfast cereals and pancake mix
289
Red meats, fresh/chilled/frozen
4,674
Red meats, prepared/preserved
239
Poultry meat
33,892
Dairy products
5,111
Eggs and products
61
Fresh fruit
2,169
Fresh vegetables
297
Processed fruit and vegetables
1,695
Fruit and vegetable juices
826
Tree nuts
250
Wine and beer
2,998
Nursery products and cut flowers
90
Pet foods (dog and cat food)
124
Other consumer-oriented products
7,009
Forest products (excluding pulp and paper)
28,006
Logs and chips
13,915
Hardwood lumber
5,851
Softwood and treated lumber
358
Panel products (including plywood)
4,662
Other value-added wood products
3,220
Fish and seafood products, edible
71,632
Salmon, whole or eviscerated
4,297
Salmon, canned
0
Crab and crabmeat
4,823
Surime (fish paste)
1,110
Roe and urchin (fish eggs)
609
Other edible fish and seafood
60,794
1,588,091
426,381
13,842
471
414,476
730,456
250
31
0
2,184
384,658
110
116,700
104,467
5,715
8,441
6,402
106,640
2,686
2,837
1,142
29,518
106,214
6,986
1,554
5,488
616
60,345
4,560
76
683
1,428
4,686
514
2,190
1,958
175
183
14,772
32,010
11,041
9,136
627
3,891
7,316
78,587
3,182
0
5,979
1,061
3,344
65,021
1,047,396
43,647
31
202
410,554
582,670
2,342
43
3
7,904
432,132
10
84,429
161,895
3,100
10,080
6,858
111,905
3,103
8,174
1,394
41,184
125,250
11,991
1,598
11,257
1,047
52,413
11,296
195
887
2,728
6,780
711
2,367
3,158
1,804
133
16,885
49,850
13,890
16,901
1,737
4,863
12,459
111,486
2,513
0
3,187
7,165
2,326
96,294
500,375
45,971
44,143
289
273,508
122,763
6,437
131
14
7,119
708,150
0
159,541
319,506
2,558
13,496
4,686
124,800
3,831
10,236
1,142
68,354
131,521
8,549
508
15,278
2,918
38,474
13,908
139
11,333
3,751
9,321
1,490
2,337
2,404
1,029
490
19,592
41,356
11,336
13,960
1,318
6,264
8,478
69,284
9,735
0
4,996
2,738
4,954
46,860
441,741
32,877
15,441
406
358,735
23,356
4,508
194
0
6,224
262,980
32
304
44,404
4,870
6,920
5,251
96,535
14,724
12,802
951
76,187
149,807
14,020
323
15,192
1,125
49,477
17,744
343
1,866
3,657
15,833
1,734
3,702
3,826
1,358
977
18,630
57,020
7,870
29,904
1,213
9,888
8,145
86,498
8,234
102
20,230
431
4,164
53,337
1,105,858
17,826
10,050
344
1,007,653
58,871
849
227
181
9,857
402,184
238
20
430
7,260
13,946
6,696
228,751
12,898
26,862
2,925
102,158
216,117
20,781
661
22,215
863
45,363
21,453
1,023
23,144
5,172
25,811
1,210
9,090
1,420
1,119
1,454
35,338
93,991
19,280
53,960
2,332
12,967
5,452
137,917
16,300
684
11,208
3,223
4,781
101,721
Agricultural product total
Agricultural, fish, and forestry total
2,078,963
2,189,560
1,604,778
1,766,114
1,340,046
1,450,686
854,528
998,046
1,724,159
1,956,067
2,633,638
2,733,276
Source: U.S. Census Bureau trade data.
Economic Research Service/USDA
China’s Food and Agriculture: Issues for the 21st Century / AIB-775 57
Appendix table 6—Basic statistics by province, 1999-2000
Per capita income, 2000
Region
Province
Population
2000
Quantity produced, 1999
Value agricultural
output, 2000
Wheat
Urban
Rural
Million
Yuan
Yuan
Billion yuan
Northeast
Heilongjiang
Jilin
Liaoning
106.6
36.9
27.3
42.4
5,064
4,913
4,810
5,358
3,593
3,713
3,259
3,704
220.2
62.5
60.9
96.7
3,595
2,842
161
592
39,064
12,284
16,926
9,854
5,494
4,466
636
392
17,648
9,443
4,059
4,146
2,996
871
955
1,170
North
Beijing
Tianjin
Hebei
Henan
Shandong
Shanxi
Shaanxi
343.7
13.8
10.0
67.4
92.6
90.8
33.0
36.1
5,753
10,350
8,141
5,661
4,766
6,490
4,724
5,124
3,127
5,516
4,649
3,308
2,726
3,881
2,424
2,033
695.9
19.5
15.6
154.5
198.2
229.4
32.2
46.5
65,288
955
716
12,805
22,915
21,177
2,665
4,055
47,548
867
563
10,880
11,566
15,514
3,754
4,404
3,297
20
27
567
1,152
969
269
293
6,999
129
402
931
3,330
1,313
33
861
10,024
291
173
2,428
3,229
2,859
435
609
South Coast
Jiangsu
Shanghai
Zhejiang
Fujian
Guangdong
Hainan
266.9
74.4
16.7
46.8
34.7
86.4
7.9
8,541
6,800
11,718
9,279
7,432
9,762
5,358
4,485
4,542
6,400
4,542
4,104
4,590
2,841
613.9
187.0
21.7
106.3
103.7
164.1
31.2
12,003
10,708
384
723
144
44
0
3,748
2,648
49
168
109
725
49
1,221
568
17
234
210
179
13
57,209
19,373
1,543
11,325
7,123
16,155
1,690
6,368
2,057
259
898
1,065
2,068
21
South Central
Anhui
Hubei
Hunan
Jiangxi
Guizhou
Sichuan
Chongqing
Yunnan
Guangxi
463.3
59.9
60.3
64.4
41.4
35.3
83.3
30.9
42.9
44.9
5,744
5,294
5,525
6,219
5,104
5,122
5,894
6,276
6,325
5,834
2,709
2,586
3,008
3,195
2,834
1,947
2,830
2,595
2,247
2,649
807.6
122.0
112.6
122.2
76.0
41.3
141.3
41.3
68.1
82.9
21,063
8,525
3,047
221
96
1,076
5,430
1,058
1,584
26
23,488
2,133
2,041
1,268
75
3,348
6,400
1,912
4,595
1,716
3,129
1,005
437
419
237
181
292
68
139
351
114,798
13,006
16,856
23,606
16,193
4,577
16,878
5,318
5,517
12,847
19,290
1,848
1,935
3,718
1,435
1,048
4,191
1,321
1,726
2,068
82.1
23.8
25.6
5.6
5.2
19.3
2.6
5,245
5,129
4,916
4,912
5,170
5,645
7,426
2,607
3,440
1,958
2,820
2,000
3,129
1,732
151.4
54.3
32.3
7.8
5.7
46.1
5.1
11,931
2,731
3,203
782
594
4,309
312
14,238
7,714
2,552
1,076
22
2,860
14
1,105
825
125
42
0
112
1
1,835
688
55
657
0
429
6
1,429
766
389
88
70
108
8
1,262.6
6,280
3,146
2,491.6
113,880
128,086
14,245
198,487
40,056
West
Inner Mongolia
Gansu
Ningxia
Qinghai
Xinjiang
Tibet
Total
Corn
Soybeans
Rice
Pork
Thousand tons
Note: Regional delineation by ERS. Regional per capita incomes are weighted averages obtained using provincial population as weights.
Source: Calculated by ERS using data from China National Bureau of Statistics, "Communique on Major Figures of the 2000 Population
Census (No. 2)," Abstract of the First Agricultural Census in China, and Rural Statistical Yearbook 2000.
58 China’s Food and Agriculture: Issues for the 21st Century / AIB-775
Economic Research Service/USDA
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