From Taxing to Subsidizing Farmers in China Post-1978

24 Pages Posted: 20 Nov 2017

See all articles by Kym Anderson

Kym Anderson

University of Adelaide - Centre for International Economic Studies (CIES); Centre for Economic Policy Research (CEPR); Australian National University

Date Written: November 2017

Abstract

This paper has three purposes: to document the pace and extent to which China's policy regime has transitioned over the past four decades from taxing to subsidizing its farmers relative to its producers of other tradable goods; to present projections of the world economy to 2030 that suggest China will continue to become more food import-dependent under current policies and productivity growth rates; and to explore alternative policy instruments for remaining food secure and ensuring that farmers are not losers from economic growth. The data used to estimate the extent of distortions to producer incentives come from freely available World Bank and OECD sources that allow direct comparisons of China's policy developments with those of more- and less-advanced economies. The estimates reveal that China has made the transition from negative to positive assistance to farmers far faster than the average developing country, and almost as fast as its Northeast Asian neighbours did in earlier decades at similar levels of real per capita incomes. That has helped to ensure China remained food self-sufficient during the first two decades of reform. However, food self-sufficiency is now declining and is projected to continue to do so over the next decade under current policies. Preventing food self-sufficiency from declining further by increasing agricultural protection is now unnecessary thanks to the information and communication technology revolution that enables the government to use conditional cash transfers to directly support the adjustment and well-being of poor farm households.

Keywords: Agricultural support policies; China's economic growth; Food security; Multiple exchange rates

JEL Classification: F13, F14, Q17, Q18

Suggested Citation

Anderson, Kym, From Taxing to Subsidizing Farmers in China Post-1978 (November 2017). CEPR Discussion Paper No. DP12438, Available at SSRN: https://ssrn.com/abstract=3074436

Kym Anderson (Contact Author)

University of Adelaide - Centre for International Economic Studies (CIES) ( email )

School of Economics
Adelaide SA 5005
Australia
+61 8 8313 4712 (Phone)
+61 8 8223 1460 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Australian National University ( email )

Arndt-Corden Dept of Economics
Coombs Building
Canberra, AK ACT 2600
Australia
+61 8 8313 4712 (Phone)

HOME PAGE: http://publicpolicy.anu.edu.au/crawford_people/content/staff/acde/kanderson.php

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