The research object was agricultural development policies in China after joining WTO

tegration The formulation and implementation of national agricultural development policies in each period based on the targets of the industry as well as the infrastructure conditions of each country. 8 - Major trends in the world agricultural market Currently, population growth is a major challenge for the global economy. It not only affects the world food security in general but also the food security in a large number of countries in particular. Secondly, the world agricultural market tends to gradually shift to developing countries, especially Asian countries. These countries increasingly account for a high proportion in the value chain of international trade in agricultural products. Thirdly, in the world agricultural market, the import and export value of processed meat products, grease, milk ... of developing countries is rapidly increasingly. Fourthly, the development of the world agricultural market in the future will be strongly influenced by international trade negotiations. Fifthly, the fluctuation in prices of agricultural products on the world market remains at a high degree. - Prospects of the world agricultural market Being able to recognize and grasp all prospects of the world agricultural market can be served as the basis for countries to formulate their agricultural development policies, based on those prospects to make appropriate decisions in developing strategies for general development of the economy. Specific agricultural development policies in each country must be clearly and closely planned to ensure the production development process, to be able to meet domestic demands, and expand to the world market. CHAPTER 3 CURRENT SITUATION OF CHINA'S AGRICULTURAL DEVELOPMENT CHINA AFTER JOINING WTO 3.1. An overview of agricultural development and problems when China joined WTO 3.1.1. Some major agricultural development policies of China before joining WTO 3.1.1.1. Household responsibility policy in agriculture The agricultural and rural economic reforms in China began in late 1978, was established on the basis of household responsibility system (HRS). The HRS reforms removed land barriers and contracted agricultural land to households, mainly based on family size and the number of labors in households. 3.1.1.2. Domestic output price policy and market liberalization China has gradually changed the production incentive mechanism through the decision to decentralize and adjust the price policy. The first price adjustment was made in 1979. After that, the purchase price of agricultural products increased significantly since 1980. Many studies by Lin (1992), Fan (1991), Huang and Rozelle (1996), Fan and Pardey (1997) affirmed strong effects of changes in price and output in the early and final years of transition. China has removed all plans to buy agricultural products such as rice, wheat, corn 9 and cotton. All such products can only be bought and sold through the marketplace. 3.1.1.3. Rural area development policy and labor market The movement of labor from rural to urban areas is central in the country's efforts in modernization. The contribution of rural enterprises (Township and Village Enterprises) to GDP increased from less than 4% (1970s) to over 30% in 1999. HTownship and Village Enterprises dominated the export sector during the 1990s (NBSC, 2001). These enterprises drew about 35% of rural workers out of the agricultural sector. In addition to wage for employment in rural areas, a significant number of self-employed rural workers grew, increasing from 8% in 1990 to 13% in 2000 (De Brauw et al., 2002). . 3.1.1.4. Agricultural trade policy In addition to important changes in foreign exchange policy, China carried out some fundamental reforms for the international trading system. Lower tariffs and the removal of import and export barriers began to have vital effects on the trade in agricultural products of China in the 1980s. Firstly, it gradually reduced the level of protectionism in agricultural commodities controlled by the State and state-owned enterprises (Huang and Chen, 1999). 3.1.1.5. Policy for the development of science and technology and agricultural infrastructure in rural areas Before the economic reform, China's agricultural investment focused on building irrigation networks and rural infrastructure. After the 1970s, China invested more in exploiting and using its groundwater resources (Wang et al., 2006). Agricultural research in China was largely state-run and they often focused on food policy. Most crop breeding programs focused on cereals (rice and wheat). With the motto of national food self-sufficiency, the main goal of research programs in China aimed towards high productivity. 3.1.2. An overview of China's agricultural production before joining WTO 3.1.2.1. Agricultural production of China before joining WTO For a country with about 1.4 billion consumers with limited natural resources, China's food imports prior to WTO participation remained relatively low. China was entirely self- sufficient and is a net exporter of several agricultural products, including food and beverages, animal products, vegetables, fish and seafood, tea, and fruits. Table 3.1. WTO Agricultural import and export of China before joining WTO (Unit: USD billions) Agricultural products Annual trade, 1995-2000 Export Import Net exports Food & Beverage 1 3.5 0.3 3.2 Animals and animal products 2 2.2 0.5 1.7 10 Agricultural products Annual trade, 1995-2000 Export Import Net exports Vegetables 1.6 0.1 1.5 Fish and seafood 1.9 0.8 1.1 Cigarettes, coffee, tea, and spices 1.1 0.2 0.9 Fruits and nuts 0.4 0.2 0.2 Cereals, food, and lean products 3 1.4 2.6 -1.3 Seed oil, fat and oils 1.3 2.9 -1.6 Yarn, cloth, leather, and tanning4 5.5 7.2 -1.7 Fertilizer 0.2 2.8 -2.6 Other agricultural products 0.4 1.2 -0.8 Note: 1 Preserved bakery products, food and beverage; 2 Live animals, meat, milk, eggs, honey, and other animal products; 3 Cereals, food and byproducts, flour and products of the milling industry; 4 da Silk, animal hair, cotton and fabric, leather and tanning Source: ERS analysis of China customs statistics reported in Hsin-Hui Hsu and Fred Gale, China: Agriculture in Transition, USDA/ERS Agriculture and Trade Report WRS-01-2, November 2001, appendix tables 5 and 6. Despite the limited agricultural land, China maintained a high degree of food production thanks to its highly intensive farming techniques, two to three crops a year, and the effective use of large amounts of fertilizer and labor. However, agricultural production in China showed the unsustainability due to the fact that Chinese farming relies on intensive labor and natural resources. Additionally, China's farm economy was still relatively small and mainly household farming. 3.1.2.2. China's growth and agricultural structure before joining WTO The trends in China's agricultural trade and economic structure over the two decades were similar to those of other developing countries prior to WTO participation. Chinese agriculture has shifted in a direction which is more suitable for its resources. The commitments in protocol to join WTO by the Chinese government were also consistent with the country's long-term reform plan. 3.1.3. Challenges for China's agricultural sector when joining WTO Firstly, China's agricultural industry has been increasingly and deeply integrated into the world agriculture, and the guarantee of the development of China's domestic manufacturing industry has become increasingly important. The second challenge for the Chinese economy is the supply-demand imbalance and the increasingly serious issue of product shortages. The third obstacle is that the input cost and other agricultural production fees tend to increase rapidly. 11 Fourthly, China has to face the imbalance in the labor and employment structure in rural areas, especially the surplus rural labor and the lack of agricultural labor structure. The fifth hindrance for Chinese agriculture is that agricultural modernization has not kept pace with industrialization and urbanization. In addition, agricultural productivity has only increased at a slow rate. The pressure to increase income for farmers is increasing. 3.2. Current situation of China's agricultural development policies after joining WTO 3.2.1. Chinese agricultural development strategy and perspective China's five new strategic development trends are: sustainable agriculture, smart agriculture, large production agriculture, market-based manufacturing agriculture, and genetically modified agriculture. China has built seven strategic areas towards sustainable development in the context of integration including biotechnology, information technology, materials... 3.2.2. Main characteristics of China's agriculture and rural areas Firstly, China's agricultural resources are relatively limited. Secondly, agriculture remains the primary source of income for millions of farmers and is also the essential means of livelihood for Chinese farmers. Thirdly, a large percentage of Chinese farmers still live below the poverty standard as their per capita annual net income were only 2,300 Yuan (about $339). The per capita net income of Chinese farmers in 2010 was 5,919 Yuan (about $874), less than one third of the disposable income of urban residents. Fourthly, with a population of roughly 1.42 billion3, China is particularly concerned with domestic food security. Fifthly, rapid industrialization and urbanization in China has increased industrial productivity which clearly polarizes the Chinese economy. Sixthly, the development of rural and social infrastructure significantly was inferior to that of urban areas and big cities (Ni, 2013). 3.2.3. Common characteristics in Chinese agricultural development policies China's agricultural development policies and adjustments in agricultural development policies can be summarized in the following aspects: Firstly, they aim to accelerate the construction of a new agricultural management system based on a combination of households, cooperatives and agricultural enterprises. Secondly, regarding the contracting policy, ownership rights will be assigned to farmers. They are encouraged to develop a production system where responsibilities and benefits are closely linked to their results. 3 Data from 2019 12 Thirdly, they promote a more equitable distribution between urban and rural public resources, and limit the gap between the rich and the poor. Fourthly, they are used to adjust objectives in national food security. In addition to the central goal of improving farmers' incomes in recent years, the foundation of agricultural policies has been the government's primary focus on food self-sufficiency and guarantee in national food security. Fifthly, the tariff policy as well as agricultural subsidies have been implemented according to the required commitments when China becomes a member of World Trade Organization. Sixthly, changes in agricultural development policies aim to actualize high-tech agriculture. Additionally, China's agricultural policies aim to improve production productivity and sustainable development. 3.2.4. China's agricultural development policies after joining WTO 3.2.4.1. Tariff policy and non-tariff barriers (i) Tariff policy China implemented tariff reductions along with tax exemptions to achieve a wide range of policy objectives. Specific tax reductions and exemptions were determined by the National Assembly and all tax reductions and exemptions were applied on the basis of the most favored nation (MFN). (ii) Non-tariff barriers Non-tariff barriers include tariff quotas, import licenses... 3.2.4.2. China's agricultural subsidies policy Table 3.14. Government spending on Chinese agriculture in the period of 2000 - 2014 (Unit: billion CNY). Year General spending Proportion of fiscal spending Spending on agricultural production activities Spending on infrastructure construction Spending on science and technology Spending on disaster relief Spending on social welfare and agricultural and rural development 2000 123.15 7.8 76.69 41.45 0.98 4.04 -- 2001 145.67 7.7 91.8 48.08 1.03 4.77 -- 2002 158.08 7.2 110.27 42.38 0.99 4.44 -- 2003 175.45 7.1 113.49 52.74 1.24 7.98 -- 2004 233.76 8.2 169.38 54.24 1.56 8.59 -- 2005 245.03 7.2 179.24 51.26 1.99 12.54 -- 2006 317.3 7.9 216.14 50.43 2.14 18.2 -- 2007 431.83 8.7 180.17 -- -- -- 141.58 13 2008 595.55 9.5 226.01 -- -- -- 207.28 2009 725.31 9.5 267.92 -- -- -- 272.32 2010 857.97 9.5 342.73 -- -- -- 335.03 2013 1,300 2014 1,400 Source: China Statistical Yearbook on the Countryside and China Rural Statistical Yearbook 2011. • China's "green box" policy - Policy for direct subsidies for cereal farmers - Environmental protection support policy - The scale and extent of China's green box policy (Table 3.15) • Amber box policy - Comprehensive policy for agricultural input subsidies - Policy for purchase subsidies of agricultural machines - Policy for subsidies of seeds and plant diversification - Minimum purchase price policy - The scale and extent of China's amber box policy (Table 3.19a, b) According to WTO's announcement on China, the budget for "amber box" policy of this country increased to 78.86 billion Yuan in 2008, accounting for about 1.5% of total agricultural output. This “amber box” policy was provided for seven main agricultural products including wheat, rice, corn, soybeans, cotton, canola and pork. Amber box policy was measured and conceptualized through aggregate measurement of support, in which China's final AMS commitment being zero. Therefore, the maximum possible amount for China's amber box policy was at the minimum level (de minimis). China's commitment to WTO establishes a minimum of 8.5% of production value for trade- distorting subsidies. • China's policy for export subsidies Before joining WTO, China offered export subsidies for corn and rice with the figures being respectively 368 yuan per ton in 1999 and 378 yuan per ton in 2001. However, after joining WTO, China was forced to stop applying export subsidies to comply with the organization's commitments. 3.2.4.3. Policy for designing and completing commercial technical barriers to trade in agriculture (TBT) TBT had become the primary means and a form of superior protection for domestic trade. China when joining WTO had to face many challenges in terms of breakthroughs in foreign technical barriers and protection of the domestic market. • Major technical barriers to trade for China's exports (1) Technical standard barriers (2) Packaging and labeling 14 (3) “Green Barriers” • China's responses to overcome technical barriers to trade Firstly, China developed a strategy for the implementation of standardization, constructed a solid technical regulation and standard system to ensure sustainable development. Secondly, they proactively established and improved the mechanism to warn about TBT. Developed countries and some developing countries all seriously followed the monitoring and study of TBT measures by trading partners and some had even build their own warning mechanism for TBT. Thirdly, China focused on bilateral, multilateral and regional cooperation mechanisms to facilitate trade activities. 15 Table 3.15. China’s green box policy Unit: Billion CNY Year General Service Reserve of food security Domestic food subsidies Income support Disaster relief Pension programs Environmental programs Regional support programs Total amount of green box policy 1999 109.1 47.6 2.6 - 5.0 - 7.1 12.9 184.3 2000 121.2 53.8 2.4 - 5.3 - 12.7 12.5 207.9 2001 145.0 59.7 0.7 - 6.0 - 17.5 13.5 242.3 2002 151.4 53.1 0.4 - 6.0 - 26.2 14.9 252.1 2003 154.3 54.5 0.2 - 10.9 - 21.6 16.4 258.0 2004 165.6 42.1 0.1 11.6 9.3 - 61.6 18.1 308.5 2005 172.7 44.1 0.1 13.2 11.5 - 48.4 19.5 309.6 2006 200.8 50.4 0.1 14.2 13.2 - 55.8 22.0 356.5 2007 280.2 54.2 0.05 16.0 20.7 - 60.1 26.6 457.9 2008 355.7 57.9 0.06 23.6 55.4 - 68.9 32.0 593.6 2009 232.2 69.5 0.06 17.0 29.9 - 91.2 37.5 477.5 2010 250.1 77.0 0.01 16.3 58.4 - 90.4 42.3 534.6 2011 326.8 35.8 0.04 18.2 42.9 4.08 85.4 51.6 564.82 2012 416.7 41.9 0.06 18.1 47.5 3.07 93.4 65.9 686.67 2013 462.1 56.9 0.07 18.4 46.2 3.82 98.2 80.5 766.23 2014 493.5 78.1 0.06 26.2 40.3 3.47 104.4 90.4 836.4 2015 596.9 151.5 0.09 21.7 70.3 3.10 121.7 117.9 1,083.2 2016 606.8 114.5 0.06 163.3 80.6 3.88 123.5 220.4 1,313.2 Source: China’s notification to the WTO (1999-2001, 2002-2004, 2005-2008, 2009-2010, 2011-2016). 16 Table 3.19b. China’s amber box policy (Million CNY) Description 2011 2012 2013 2014 2015 2016 AMS Production Value AMS Production Value AMS Production Value AMS Production Value AMS Production Value AMS Production Value Protocol specification AMS (PS AMS) Total of PS AMS Corn 7,324 376,390 9,109 442,450 51,970 475,520 75,077 479,170 107,701 431,490 57,166 433,720 Cotton 18,820 157,450 40,609 147,780 40,440 142,200 31,212 130,930 30,528 104,140 16,844 79,010 Beef 474 229,900 460 265,360 462 318,470 468 351,970 471 362,360 119 298,700 Peanuts 415 97,490 415 112,530 416 112,500 416 107,020 416 106,100 - - Pork 4,598 1,222,540 5,088 1,243,590 1,037 1,256,060 770 1,229,760 765 1,285,970 73 1,413,340 Canola 7,063 64,940 8,834 80,960 12,040 83,060 6,812 85,780 2,001 80,240 2 66,170 Rice 8,103 526,010 10,628 571,490 41,745 601,460 37,935 619,300 38,350 612,910 27,793 627,100 Potatoes 363 134,910 374 137,690 404 141,320 365 148,580 346 154,130 59 141,360 Sheeps 255 171,320 259 201,000 547 229,470 261 237,770 261 208,690 60 219,170 Soybean 3,581 65,350 5,789 64,080 2,660 61,690 7,583 60,210 6,580 53,760 7,347 53,390 Sugar 3,911 64,490 6,543 68,590 - - - - - - - - Wheat 5,049 248,250 12,990 264,100 9,644 289,160 22,298 307,690 19,025 313,150 19,539 300,560 Non protocol specification AMS (NPS AMS) Total of NPS AMS 103,697 132,449 133,346 134,592 133,532 25,759 Input subsidies 84,596 109,146 109,124 10,910 107,996 97 Purchase support for agricultural machines 19,101 23,303 24,222 25,482 25,536 25,662 Surcharge (-) TOTAL AMS Source: China’s notification to the WTO 2011-2016 17 3.3. Evaluation of China's agricultural development policies after their participation in WTO and theirimpacts on agriculture After joining WTO in 2001, the prosperity of foreign trade played a very important role in the "take off" of Chinese economy, which made China become the second largest economy in the world, only after the US. 3.3.1. Evaluation of the implementation of China's agricultural development policies after joining WTO 3.3.1.1. Achievements (i) China carried out effectively its commitments which met WTO's requirements The roadmap of China's tariff reduction met WTO's requirements; the tariff reduction rate was also conducted in accordance with all the commitments when China joined WTO. Export subsidies were eliminated after China officially became a member of the WTO since 2001. (ii) China's agricultural subsidy policies placed a great emphasis on developing agricultural infrastructure and flexibly using "amber box” tools. Data from the "Green Box" policy and China's Three Rural Issues proved that, after joining the WTO, China had always increased its investment in a fairly synchronous manner in infrastructure in general and agricultural infrastructure in particular. Road traffic system, rural traffic, irrigation systems had always been China's top priorities (iii) China obtained remarkable achievements in agricultural production management and organization Organization forms of agricultural production had been developed in a more diversified manner. Vertical management in agricultural production increased rapidly and the scale was also expanded (Zhen & Xiangzhi, 2014). The agricultural service system was also been significantly improved. 3.3.1.2. Limitations (i) The value of domestic support measures to agriculture remained low (ii) Some policies had distorted the market (iii) During the implementation process, China still violated some of WTO's commitments (iv) The design of the agricultural policy system still had some limitations 3.3.2. The impacts of China's agricultural development policies after joining the WTO on agriculture 3.3.2.1. Positive impacts i. Domestic subsidy policies contributed to increasing resources for agricultural development and overall growth, promoting the development of agricultural science and technology. ii. The policies increased the value of agricultural output, and China can provide food for one-fifth of the world's population. 18 Table 3.21. Some results of China's agricultural development policies in the period of 2000-2018 Year Agriculture spending (109 CNY) Total food production (106 tons) Net income per capita of farmers (CNY) Total import-export turnover of agricultural products (109 CNY) 2000 -- 462.18 2,253 26.95 2001 -- 452.64 2,366 27.90 2002 -- 457.06 2,476 30.59 2003 214.42 430.70 2,622 40.36 2004 262.62 469.47 2,936 51.42 2005 297.53 484.02 3,255 56.29 2006 351.72 498.04 3,587 63.48 2007 431.83 501.60 4,140 78.10 2008 595.55 528.71 4,761 99.16 2009 725.31 530.82 5,153 92.13 2010 857.97 546.48 5,919 121.96 2011 1,049.77 571.21 6,977 155.62 2012 1,228.66 589.57 7,917 175.70 2013 1,379.9 601.94 8,896 186.69 2014 1,517.8 607.03 10,488 236.0 2015 1,758.8 621.44 11,421 226.6 2016 1,877.6 616.25 12,363 225.1 2017 1,908.9 661.60 13,432 262.0 2018 - 657.89 - 172,2 Source: Chinese Agricultural Yearbook; Statistical tables, chapter 8, WTO, FAO STAT iii. Sub-policies in the "green box" policy, especially the increase in investment in science and technology along with the urbanization process, had promoted the transformation of Chinese agriculture, the form of production organization in a more positive and modern orientation. iv. The removal of tariff and non-tariff barriers of China towards the world market helped China expand their import and export markets, boosting import and export turnover. v. Agricultural support policies, income subsidies and increased investment in agricultural spending in China contributed to hunger eradication, poverty reduction and farmers' income improvement. vi. Policies for investment in science and technology development, infrastructure development, design and completion of agricultural technical barriers to trade (TBT) promoted competitiveness and comparative advantage for Chinese agriculture vii. Environmental protection policies and the process of completing agricultural technical barriers 19 to trade (TBT) change China's habits in agricultural production in a positive direction. Through evaluation, some remarks about China's agricultural development policies after joining China can be drawn. Group of sub-policies under "green box" policy had the most considerable effects on production outcomes and the country's achievements. Notably, policies for science and techonology development as well as for infrastructure played an important role in agricultural achievements. They are followed by rural subsidies and consultancy, In addition, amber box policy, particularly such as input subsidies, support for agricultural machines or price support also contributed to China's achievements in agriculture. Concurrently, China's agricultural development policies after joining WTO also focused on promoting comparative advantage and were associated with the goal of sustainable development. The comparative advantage of Chinese agriculture was the labor-intensive sector. They could increase the export of products from labor-intensive industries such as seafood, fruits, vegetables and silk. These were also products that China had had a trade surplus for many years. Additionally, they also imported products with less comparative advantage such as oilseeds and vegetable oils (J. Huang et al, 2018). Also, after joining WTO, China's agricultural development policies had aimed at a sustainable agriculture. This is clearly shown through policies such as infrastructure development, science and technology research and development, and environmental policies. These policies made China's total factor productivity (TFP) in agriculture being quite high, ac