Agriculture Reference
In-Depth Information
easier for these sectors to be integrated, as both sides will benefit. Because
Chna and ASEAN do not possess comparatve advantage n raw materals and
oil seeds, these are areas for export opportunity for other countries.
Changes in comparative advantage in China and ASEAN, by
commodty
It s useful to examne the hstorcal changes n comparatve advantage
in China and ASEAN. The RCA indices in Table 12.3 show that China had
comparatve advantage n the producton of the followng commodtes
during 1992-2005: animal products, fish, vegetables and fruits, and
processed products.
During this period, the values of China's RCA indices for these products
declined; however, the relatively large positive values of the RCA indices
mply that Chna's comparatve advantage n these commodtes wll
contnue for some tme.
The values of China's RCA indices for cereals and sugar have fluctuated
sharply and were negatve n some years. As cereals are related to food
security and sugar is very important for farmers' income, especially poor
farmers, the production and trade of these commodities are among the
most highly distorted (Tian et al. 2005; Huang et al. 2005). With imbalances
between domestic supply and demand as a result of policy changes, large
fluctuations in exports are expected. Based on the country's endowment
of natural resources, however, it is impossible for China to export large
quanttes of these commodtes to ASEAN n the future. Wth regard to raw
materials, rubber and vegetable oils, the values of China's RCA indices have
been negative since 1992, implying that China is and will remain heavily
dependent on the world market to meet ts growng domestc demand for
these commodtes.
As shown in Table 12.4, during 1992-2005 ASEAN had strong comparative
advantage in the production of vegetable oils, rubber, vegetables and fruits,
and fish. The high positive RCA indices for these agricultural products
suggest that ASEAN wll be able to sustan ts exports. The values of ASEAN's
RCA indices in processed products, though slightly positive, are close to
zero, which suggests that imports will soon exceed exports.
