Agriculture Reference
In-Depth Information
Addtonal protecton to agrcultural sectors
Many studies of China's WTO accession have projected that agriculture will
be one of the hardest hit sectors. The simulations reported above confirm
that agriculture will be adversely affected by the WTO accession, leading
to a worsenng of regonal ncome dspartes as the nland regons have a
higher proportion of agricultural activities in their economies. Therefore, the
Chnese government (and academc crcles) have been worryng about ths
ssue and adopted some measures to antcpate the detrmental outcomes.
6,7
These measures provde addtonal protecton to agrculture.
To capture this additional protection to agriculture, the simulations
presented n the prevous secton are revsed wth the tarff cuts n the
agricultural sectors being only half of the level in the previous section,
ceteris paribus
. The simulation results are reported in Tables 6.3 and 6.4.
Several ponts are evdent from these results.
First, such policy actions do provide some cushioning effects to
agricultural sectors. The increase in agricultural imports is smaller, falling
from 47.3 per cent to 15.2 per cent with the closure of no control on the
trade balance, and from 44.2 per cent to 13.1 per cent with the closure of
no change in the trade balance. Consequently, agricultural output declines
by only 0.03 and 0.07 per cent, respectively. Second, because the central
region is the major agricultural production area, this protection helps the
central region achieve higher welfare (up from 3.36 billion yuan to 4.12
billion yuan) with the closure of no control on the trade balance, or lower
welfare loss (from -2.28 billion yuan to -0.50 billion yuan). Third, it also
helps to ease the worsening rural-urban inequality. Rural households have a
hgher growth n utlty than n the prevous scenaro whle urban households
have a lower growth. Fourth, the negative impact on the trade balance and
the terms of trade is now smaller. Finally, however, the total welfare gain
s smaller than for the full tarff cuts set by the WTO agreement.
Domestc market reform
It s often argued that Chna's domestc economy s not well ntegrated
and heavy regonal protecton exsts. One promnent example s the
restriction on the movement of people. Also, in many regions the use of
