Influence of Agricultural Policy on Chinese Food Economy

TINGSI WANG

China’s policies of agricultural and rural development

1) Subsidy Policy

China’s central government have been stepping up fiscal spending, in recent 10 years, on the development of the agriculture and rural regions as well as on the improvement of farmers’ livelihoods, in effort to bridge gaps of wealth distribution and urban-rural development

In general, four types of subsidies provided by government were increased rapidly during the period from 2004-2010

2004 2005 2006 2007 2008 2009 20100

20

40

60

80

100

120

140

160

Unit: billion yuan

direct support payment general subsidies for purchasing agricultural suppliesseed subsidy machinery subsidy

Subsidy rate(subsidy/product value, %)

2004 2005 2006 2007 20080

5

10

15

20

25

30

1.82 1.92 2.89 3.7

6.441.03

1.85

3.1

4.55

7.42

1.361.78

2.57

3.42

6.49

0.04

0.25

0.9

0.9

3.13

0

0.17

0.39

0.85

2.05

rice wheat maize oil crop cotton

China’s Achievements from the subsidies

(1) comprehensive production increase of grain yields.subsidy(yuan per hectare)

2004 2005 2006 2007 2008

196.2 192.45 304.65 426.3

853.05

78.15 124.8234.6

371.55

715.35

100.5 125.4

206.7

324

645.15

318

79.95

114.9

378

0.625.05

60.15

172.65

326.7

Rice Wheat Maize Oil Crop Cotton

(2) Foundation of agriculture is significantly enhanced

Agricultural production and management undergoes profound changes, and new business entities enjoy rapid development. In 2011, various types of farming cooperatives and organization amounted to 521,700, and agricultural organizations under industrialized management reached 280.000, driving the development of 151 million farming households.

agricultural scientific and technological equippments are advanced by great leaps. The agricultural scientific and technological advance in China has contributed 53.5% to agricultural growth. The integrated farming mechanization rate of ploughing, planting and harvesting has reached 54.8%.

(3) rapid growth of farmers’ income

In 2011, the per capita net income of rural residents reached RMB 6977.

In 1979-2011, the growth rate of farmers’ average annual net income per capita recorded 7.4%.

In 2010-2011, the growth rate of farmers’ income exceed the growth rate of urban residents’ income. The income gap between urban and rural residents is gradually narrowed.

(4) rural areas have undergoes historic changes

Rural infrastructure construction continues to be strengthed, and production and living conditions have been significantly improved.

Social undertakings undergo rapid development in rural areas, and equalization of basic public services enjoy rapid advance in urban and rural areas.

2) investment policy

The Chinese government has recently taken a number of policy measures to ensure its food supply in the future. Various types of public investments on agriculture have increased.

Those forms of public spending have significant impacts on food production, price, and trade.

Investment on agriculture R&D

The increasing investment on agriculture R&D meets the global trends. Global challenges, including the recent food and financial crisis and climate change, highlight the need for continued and scaled up in the investment.

China has the world’s largest and most decentralized public agricultural R&D system.

Government investment in agricultural R&D doubled from 2001 to 2008, ending a period of stagnation in the 1990s.

The private sector is increasingly involved in agricultural R&D.

The intensity of China’s agricultural R&D investment was 0.5 percent in 2008. This ratio is close to the average for the developing world, but only half of the world average.

Image from: http://www.ifpri.org/gfpr/2012/agricultural-productivity

Image from: http://www.foodandagpolicy.org/strategy/redirect-research-education-and-extension-priorities-and-strengthen-institutions

Image from: http://scienceprogress.org/2011/07/u-s-scientific-research-and-development-202/

R&D Spending Compared With the Other Developing Countries

Image from: http://www.asti.cgiar.org/globaloverview/productivity-growth

Other subsidies and investment: education, training, agricultural facilities etc.

All of these types of public spending, expect for agricultural subsidies, have positive impacts on economic growth and contribute to increase the food production.

Increased spending on agricultural R&D, irrigation, and agricultural subsidies improves self-sufficiency rates for rice, wheat, maize, and beans.

Characteristics of Chinese agricultural policy

Leading

Progressive

Differentiated

Market-oriented

Legalized

Summary

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