China’s Rural Food Security and WTO Accession: An Empirical Analysis of Border Liberalization on Selected Rural Households

Food security commands much attention from policy makers and economists in China as well as in other less developed countries. Following WTO accession, the impact of trade liberalization has also received much comment, particularly the linkage between food security and opening the border to more agricultural trade. To better understand how food security is affected by trade policies, this paper builds and applies a detailed simulation model to measure the effects of alternative trade policy scenarios on the food security of selected rural populations in China. I. WTO, China and Food Security: the road to liberalization and to where it is leading us China’s effort on trade liberalization internally and internationally is unquestionable. Despite the periodical policy setbacks, markets have emerged since the late 1978 reform (Huang and Rozelle 2002). Except the Government Grain Bag Policy in 1994 turning over the responsibility of grain production, marketing and quota fulfillment to governors, and Prime Minister Zhu’s 1998 contraction Ag policy trying to reduce official and market price gap and thus the heavy fiscal burden by restricting grain outflows to only state bureaus, China’s fundamental agricultural policy has been aiming at a more open and freer market system. Such as during 1980s, the beginning of the reform, procurement system was unified and the flows of grains were facilitated. Grain flows were further fortified and improved by the “double-track pricing system” from 1985 to 1991: farmers were allowed to sell their above-quota grains onto the markets or to the grain bureau at negotiated price. More consistent than the domestic policy, China’s international agricultural policy has driven toward liberalization since the beginning of the reform. Foreign exchange controls have been loosened, the numbers of products under controlled and quota-restrained or licensed foreign trade have decreased, export subsidies have been removed, import duties reduces extensively and many regulations on foreign investment have been abolished (Bach and Martin 1997). Moreover, about 20,000 private enterprises have been granted trading rights since the government relaxed Min Chang is a Ph.D. candidate and Daniel A. Sumner is a professor, Department of Agricultural and Resource Economics, University of California, Davis.