China’s Agriculture in the World Trading System - 中欧社会论坛 - China Europa Forum

China’s Agriculture in the World Trading System

Authors: Cheng Guoqiang

Extract from ” Management Worldly (Monthly), 2005“

China is a large developing agricultural nation with a population of 1.3 billion people. Agriculture has been known in China as a safe and stable strategic industry.The market-oriented agricultural reform which started in 1978 is the historical turning point in the development of China’s agriculture. Not only did it break the constraints of the traditional system, it also promoted the rapid development of the rural economy, creating a miracle of feeding the lives of nearly 21% of the world population with less than 9% of the world’s arable land. It also led and promoted the reform of China’s economic system in full swing and supported the rapid growth in China’s economy. China joined the WTO at the end of 2001. There was a large increase in the extent of the opening up of China’s agriculture. There was massive change in the extent of correlation between China’s agricultural industry and the world’s agricultural industry. In the World Trading System, China, being a major country for agricultural production and consumption, could both be negatively hit by the international market as well as have a large impact on the international market.

After more than 20 years of development, China is becoming a large agricultural trading nation which has a large impact on the international market. Trade growth shows that China’s agriculture is enjoying large benefits from global economic integration. This has great implications for China’s economic growth: first, China’s agricultural exports still contributes to foreign exchange; next, it plays an important role in increasing employment of rural residents, in promoting adjustment in rural incomes and agricultural structures, as well as increasing agricultural competitiveness; third, agricultural imports have eased the pressure on the shortage of agricultural resources and have promoted the comparative advantage in agriculture and the optimisation of agricultural resource allocation. On the whole, currently China’s economy has integrated into the world economy to a larger extent. China is enjoying large benefits from global economic integration, and has also become the engine of world economic growth, allowing even more countries to benefit. Currently, China has become the country with the largest foreign direct investment. China’s foreign trade dependency has reached 55%.

The end of the WTO transition period means that China’s agriculture has entered a new stage of opening up. China shall move further towards the integration of economic globalisation and China’s agriculture shall face increasing pressure from international competition. In particular, the situation where China’s traditional agriculture with small-scale decentralised management cannot compete with foreign large-scale modernised agricultures will not change any time soon; the unfair international agricultural trade environment in developed countries caused by high agricultural subsidies and high security is also unlikely to change any time soon. The impact to and challenges for China’s agriculture since joining the WTO are long-term and will gradually unveil after the transition period. It is displayed in: growing pressure of agricultural imports; agricultural trade deficit may become the norm; increase in the difficulty of international market risk prevention and management; and international agricultural trade environment becoming more complicated. In time to come, not only is it not conducive for China’s advantage in expanding agricultural exports, it can also impact the domestic agricultural market due to a surge in agricultural imports. Given that China’s rural population has yet to undergo a large scale shift, this has affected the employment and income of the rural population, thereby affecting China’s economic reform, development and social stability.

Apart from that, in the coming years from now on, China will be in a new development stage with a per capita GDP of 1000 USD to 3000 USD. China will enter the important period of rapid development in industrialisation, urbanisation and modernisation. International experience shows, this is a strategic opportunity for China’s development, but it is also a challenging period which highlights all kinds of contradictions. In this critical period, solving the three rural issues and the agricultural rural economy continuing to play the supporting role to the national economy not only concerns the increase of rural income, agricultural efficiency and rural development, but it also directly affects China’s grasp of strategic opportunities. It is related to the overall situation of the national economic and social development in China. However, China’s agriculture is currently the weakest link in the national economy. There are a few deep-seated contradictions which have plagued agriculture and the development of the rural economy for a long time which are yet to be solved and China’s agricultural development is still facing serious pressure and challenges: increasing pressure of population and food consumption demands growth; difficulty in increasing agricultural international competitiveness due to rigid agricultural resource constraints; an institutionalised system which affects agriculture and rural development is surfacing.

In the world trading system, as a large populous and agricultural developing country, the challenges which China face are more complicated than the challenges faced by other country. Not only must China’s agriculture continue to receive the large benefits of global economic integration and further integrate into the world trading system, it must also choose the right development strategy, take active measures and face the numerous challenges of international competition: to maintain a foothold in the food security strategy in domestic production;

promote participation in the agricultural trade strategy developed by the world trading system; in the near future, China can take comprehensive measures to expand China’s superior agricultural exports, to prevent and eliminate the impact of agricultural imports on the domestic market, to participate actively in the WTO Doha negotiations and to promote the establishment of fare and reasonable international trade rules.

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