Potential Issues in Food Reform Process and Impacts of Policy Options : The Case of China

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During the last decade, increased use of inputs became a major source of growth in China's food sector. Especially, recent policies biased toward food production have stimulated input use rather than productivity growth in the food sector. If the cost of food production continues to rise, it will constrain growth in China's food production and weaken its competitiveness in world markets. If this occurs, farmers' income will further worsen. This paper attempts to analyze the impacts of alternative policy options, focusing on improving food production and farmers' income. For this purpose, we make use of GTAP database version 6.0 and construct a food-focused computable general equilibrium (CGE) model that can be used to analyze the economy-wide impacts of changes in a set of alternative options for the operation of China's food sectors. The simulations analysis shows that these alternative policies bring about higher food output, and that rural households also experience an increase in incomes. Meanwhile, these alternative policies have a major influence on the effectiveness of agricultural productivity growth in advancing economy-wide growth and equity.

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