Changes in China's Major Agricultural Product Trade Pattern Over the Next Decade and Countermeasures
In order to grasp the supply and demand situation and trade development trends of China's four major categories of agricultural products - grain, cotton, oilseeds, and sugar - and to analyze possible changes in the import pattern in the coming period and their potential impact on domestic and international market prices, we used the “China Agricultural Sustainable Development Decision Support System” and the “Global Trade Analysis Project” model to conduct a predictive analysis of the possible impact of China's agricultural product imports on prices over the next 10 years, and put forward countermeasures and suggestions for maintaining the stability of China's major agricultural product markets and prices.
Supply, Demand, and Trade Trends of China's Major Agricultural Products in the Next Decade
The “China Agricultural Sustainable Development Decision Support System” is a multi-regional spatial equilibrium model specifically designed for analyzing China's agricultural product supply, demand, and trade. It includes 17 major agricultural products, 8 major regions across the country, and two groups of consumers: urban and rural. The model fully takes into account constraints of natural resource conditions, the mutual influence between production and consumption, the interrelationship between crop farming and animal husbandry, and the mutual influence among different products in the agricultural sector. Assuming that during 2014-2023 China's annual GDP growth rate remains at 7.5%-6%, the urbanization rate rises to 63% by 2023, and population growth, resident income, and grain yields per unit area all increase appropriately, the model analysis results show that in the next 10 years China's imports of grain crops, cotton, and sugar will all increase substantially.
1. Staple food is basically self-sufficient, the feed grain gap widens, and the grain self-sufficiency rate declines
China's grain sown area will decline slightly while remaining stable, and yield per unit area and total output will rise steadily. Grain demand will show rigid growth, the overall self-sufficiency rate will continue to decline, and there will be significant differences between the supply and demand of staple food and feed grain. Among these, rice output will rise steadily, demand for food, feed, and processing will all increase, domestic supply and demand will be basically balanced, and the net import volume in 2023 will be 1.8 million tons; wheat production will grow amid fluctuations, feed and industrial consumption will increase substantially, domestic supply and demand will be somewhat tight, and the import volume in 2023 will be 5.7 million tons; corn production will develop further, feed and industrial consumption will continue to maintain relatively rapid growth, the domestic supply and demand gap in 2023 will be 18 million tons, and the self-sufficiency rate will fall to 92.7%.
2. Cotton production maintains its current scale and basically meets domestic consumption
China's cotton planting area will shrink further, but the yield per unit area will increase, and total output will basically remain at the 2013 level in the long term, at about 6 million tons. Cotton demand will rise steadily, increasing to 9 million tons by 2023, requiring imports of 3 million tons, with the self-sufficiency rate falling to 67%. Considering that 35% of China's cotton demand comes from exports of textile industry products, cotton production can basically meet domestic consumption.
3. Demand for oilseed crops increases rapidly, and the gap widens
China's oilseed crop output has little potential for growth, and large-scale imports will remain the norm. By 2023, the soybean supply and demand gap will expand to 75 million tons, and the self-sufficiency rate will fall below 20%; the output of oilseed crops such as rapeseed and peanuts will be 9.1 million tons, total demand will be 10.2 million tons, and imports will grow to 1.1 million tons; imports of vegetable oils such as palm oil will increase from the current 5 million tons to about 7 million tons.
4. Sugar production fluctuates and stagnates, demand grows, and the gap widens
China's sugar crop production area will shrink, and there will be little room for increasing sugar output. Sugar consumption will maintain steady growth, and the pattern of production falling short of demand will persist for a long time. In 2023, China's sugar output will reach 15.6 million tons, demand will be 20.8 million tons, the production-demand gap will expand to 5.2 million tons, and the self-sufficiency rate will fall to 75%.
The Impact of China's Agricultural Product Imports on Prices in the Next Decade
The Global Trade Analysis Project (GTAP) model is a multi-country, multi-sector applied general equilibrium model designed according to neoclassical economic theory. The model architecture covers sub-models of production, consumption, government expenditure, and other behaviors for nearly 200 countries (or regions), linking the sub-models through international trade to analyze the impact of changes in trade policy on production, imports and exports, commodity prices, and other aspects of various sectors in various countries. Because the model has good results in quantitative policy analysis, it can provide specific and relatively accurate recommendations for policy choices and decisions. Major economic organizations in today's world, such as the World Trade Organization, the International Monetary Fund, and the World Bank, all use this model to analyze the international economy. The model analysis results show that in the next 10 years, China's imports of major agricultural products will have a certain impact on international and domestic market prices.
In 2023, China will import 1.8 million tons of rice and 5.7 million tons of wheat respectively, which will cause international market prices of rice and wheat to rise by 2.1% and 1.9% compared with the scenario in which China does not import. In 2023, China's corn supply and demand gap will be 18 million tons. If it relies entirely on imports, it will cause the international market corn price to rise by 4.5% compared with the scenario in which China does not import, the domestic market corn price to rise by 2.8%, and push the wheat price up by 1.8%; if imports are limited to within the tariff quota of 7.2 million tons, it will cause the domestic corn market price to rise by 10.5% and drive the wheat price up by 5.8%.
In 2023, China's soybean imports will grow to 75 million tons, which will cause the global soybean price to rise by 6.8% compared with China's current imports of 60 million tons; if imports are limited to the current level, the domestic soybean price will rise by 29%, and drive increased imports and price increases of corn and wheat.
In 2023, China's sugar imports will grow to 5.2 million tons, which will cause the international market price to rise by 2.2% compared with China's current imports of 4.1 million tons; if imports are limited to the current level, it will drive the domestic sugar price up by 14.3%.
Overall, in the future China will maintain absolute security of staple food. Rice imports are mainly caused by the price difference between domestic and international markets, while wheat imports are mainly used for variety adjustment. The import scale of the two accounts for a relatively small proportion of international trade volume, and their impact on international market prices is very limited; in the future, the increase in China's corn and oilseed imports will mainly be to fill the domestic supply and demand gap. The proportion of the import scale in international trade volume will increase somewhat, which will have a certain impact on international market prices, but the possibility of causing drastic fluctuations in international prices is relatively small; the increase in sugar imports will have little impact on international market prices.
Countermeasures and Suggestions for Maintaining the Stability of China's Agricultural Product Market Prices
1. Collect and master domestic and international market supply, demand, and price information
Strengthen the monitoring and analysis of agricultural product market information, release supply, demand, and price information for grain, cotton, oilseeds, and sugar in a timely manner, and reasonably guide market expectations. Give full play to the role of China's embassies and consulates abroad, focus on collecting market and price information from major producing countries of crops such as grain, cotton, oilseeds, and sugar, and build a monitoring system for information on the production, consumption, trade, and prices of major agricultural products worldwide.
2. Adjust and improve China's agricultural product production and circulation policies
Increase funding input, improve the subsidy system, and ensure that China's grain is basically self-sufficient. On the basis of drawing on the experience of the pilot practices of target price subsidies for cotton and soybeans, launch pilot target price subsidies for products such as sugar crops to stabilize domestic production. Reasonably determine the control range for price fluctuations, and comprehensively use reserves of grain, cotton, oilseeds, and sugar as well as import and export adjustments to maintain market and price stability.
3. Rationally utilize international agricultural product resources and markets
Promptly formulate and implement an international trade strategy for imported agricultural products, strengthen planning guidance, optimize the layout of source areas for grain, cotton, oilseeds, and sugar, and establish stable and reliable agricultural product trade relationships. Accelerate the implementation of the agriculture “going global” strategy, cultivate large enterprises in grain, cotton, oilseeds, and sugar with international competitiveness, actively participate in global agricultural product market circulation, trade, and processing links, and ensure the stable and effective supply of China's major agricultural products.