International agricultural trade reforms and implications on China's feedgrain demand

Abstract

In view of China's rapid increase in animal production and the commonly held view that China's ability to increase feedgrains is limited, it is useful to examine China's feedgrain international trade prospects in a broad context. This has become even more important given that China is now a member of the WTO and its trade will be more affected by the international market and by the reforms in international trade arrangements. In this paper, with the aid of the GTAP model, a simulation exercise is carried out to evaluate quantitatively how the world feedgrain market will change under different scenarios of trade policy reforms in general and how China's feedgrain demand may be affected by such reforms in particular. According to the simulation results, (1) China is likely to turn from being a net exporter into a net importer of agricultural products after WTO accession; (2) the volumes of China's feedgrain trade as well as some other major agricultural products will remain relatively small in terms of their shares in domestic trade and in world trade; and (3) the removal of existing trade distortions by major developed countries will strengthen China's competitiveness in some agricultural products such as animal products and coarse grains. Implications are discussed.