Cheng Guoqiang

Agriculture was one of the most difficult issues in the negotiation for China's entry into the World Trade Organization (WTO) and one of the industries with the most limited impact for opening up to the outside world. Currently, the evaluation of the impact imposed on Chinese agriculture during the 10 years since China's entry into the WTO is of great concern to both academic circles and decision-makers. Based on the review and assessment of the growth and structural change of Chinese agriculture in the past decade, we analyzed and identified the basic experience gained from the opening up of Chinese agriculture and the issues calling for attention during the process, and put forth the strategic direction and policy options for further opening up Chinese agriculture under the new circumstances.

I. Chinese Agriculture: Opening up, Growth and Structural Change

China's entry into the WTO and the expanded opening-up of Chinese agriculture have had a positive and profound influence on Chinese agriculture. Generally speaking, in the past decade, China has continued to push forward the opening-up of agriculture in terms of scope and depth; actively built up the capacity for making coordinated use of both the domestic and foreign markets and resources; strived to improve the overall quality, operation efficiency and market competency of agriculture; and provide strong support and guarantee for the national food security, the supply of major farm products, the steady and rapid growth of the national economy, as well as the harmony and stability of the society. To be specific:

1. Be faithful to the commitments made and basically form the opening-up pattern of agriculture

In the past decade since China's accession to the WTO, China has been faithful to its commitments. China has cut down the tariffs for farm products step by step to 15%, less than a quarter of the world average of 62%, making China one of the countries with the lowest tariffs for farm products in the world ¹; complied with the commitments concerning tariff quota administration, adopted import control and domestic market measures on key farm products such as grains and cotton, as well as means of agricultural production such as fertilizers²; cancelled subsidies for farm product exports and restricted the domestically supported yellow box subsidy³ within 8.5%.

Meanwhile, China has actively encouraged the agricultural introduction and the utilization of foreign investment, and launched programs in integrated development, processing and circulation of farm products and technological R&D, which have played a positive role in promoting the development of modern agriculture, upgrading the structure of the farm product processing industry, and enhancing the safety level of farm products. China has also intensified the efforts on international cooperation in agriculture and the establishment of an open, fair and reasonable framework for international and bilateral agricultural cooperation; explored and implemented the "going global" strategy for agriculture. Many agricultural enterprises, including private ones, are active in overseas investment, and have launched agricultural development and cooperative operation in Southeast Asia, Africa and South America, forming a sustained, stable and reasonable global import supply chain for resource agricultural products.

China has actively participated in and promoted trade negotiations, so as to further improve the environment of international agricultural trade. Based on the resources and comparative advantages of Chinese agriculture, China has promoted bilateral trade liberalization with ASEAN and New Zealand; fully participated in the Doha Round negotiations to facilitate the establishment of fair and reasonable rules for international agricultural trade. After ten years of opening up, Chinese agriculture has basically integrated into the international trade system, with its opening-up being broadened and deepened, basically forming the comprehensive opening-up pattern of agriculture.

2. Agriculture has achieved a sustained and steady development with the comprehensive production capacity improved continuously

In the past ten years after the accession to the WTO, China has taken active measures to deal with the impact of fierce market competition, frequent trade frictions, the international financial crisis and the extremely volatile market of farm products; managed to address the challenges of the rise of the costs of agricultural production, decline of comparative interests, and frequent natural disasters; and achieved sustained and steady growth. From 2002 to 2010, the value added of Chinese agriculture rose at an average annual rate of 11.8%, 1% higher than 10.8% from 1998 to 2001 before China's accession to the WTO (Table 1).

Table 1 Change of the Chinese Economic Structure (%) from 1978 to 2010

Source: National Bureau of Statistics, China Statistical Yearbook, all relevant years

In particular, for the past decade, China has unwaveringly adhered to the guideline of basically achieving self-sufficiency of grains through self-reliance, and attached great importance to grain production. The grain yield increased from 452.6 billion kilograms in 2001 to 546.5 billion kilograms in 2010, an increase of 20.7% and an average annual growth rate of 2.1%. Since 2004, in particular, China has witnessed eight consecutive years of bumper harvest, and the total yield has remained above 500 billion kilograms, breaking the pattern of one decrease in every three years, and consolidating the basis for food security (Table 2). China has also made breakthroughs in the production of other major farm products such as oils, cotton, sugar, meat, poultry, eggs and milk, aquatic products, fruits and vegetables, enhancing the comprehensive production capacity of agriculture, and optimizing the agricultural structure (Table 3). The continued steady agricultural growth has not only satisfied people's needs for higher living standards in the accelerated process of industrialization and urbanization, but also provided a solid basis and strong support for addressing natural disasters, and violent fluctuations of international grain prices, maintaining the continued steady economic development, and securing social harmony and stability.

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*This is the final research finding on "China's Entry into WTO and the Reform and Development of Chinese Agriculture" conducted by China Development Research Foundation.

¹Currently, countries with binding farm product tariffs lower than China are: Czech (12%), the Unites States (11.9%), New Zealand (7.3%) and Australia 3.9%.

²China committed to conduct tariff quota administration for the import of grains, vegetable oils, cotton, sugar and wool and the import tariff quotas reached their peak in 2004. Since then, the proportion of state trading for all products has been decreasing except for wheat, for which the state trading proportion has remained 90%. The designated trading regime for wool and wool top was terminated in 2005, and the tariff quota administration for bean oil, palm oil and rapeseed oil was terminated in 2006, imposing a unified tariff of 9% instead. Sliding duties apply to out-of-quota imports of cotton. The retailing and wholesale of pesticides and plastic sheeting for agricultural use was opened to foreign enterprises in 2005 and the retailing and wholesale of fertilizers were opened in 2007.

³This refers to the price support and subsidies subject to restrictions under the agricultural agreements of the WTO. It shall be kept under a permitted level and commitment of reduction is required.