Jikun Huang, Xiaobing Wang (email: firstname.lastname@example.org), Huayong Zhi and Zhurong Huang are at Center for Chinese Agricultural Policy, Institute of Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing, China. Xiaobing Wang is also at Institute of Agricultural Development in Central and Eastern Europe, Germany. Scott Rozelle is at Freeman Spogli Institute, Stanford University, CA, USA and LICOS, K.U., Leuven, Belgium.
Subsidies and distortions in China’s agriculture: evidence from producer-level data*
Article first published online: 4 JAN 2011
© 2011 The Authors. AJARE © 2011 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd
Australian Journal of Agricultural and Resource Economics
Volume 55, Issue 1, pages 53–71, January 2011
How to Cite
Huang, J., Wang, X., Zhi, H., Huang, Z. and Rozelle, S. (2011), Subsidies and distortions in China’s agriculture: evidence from producer-level data. Australian Journal of Agricultural and Resource Economics, 55: 53–71. doi: 10.1111/j.1467-8489.2010.00527.x
The authors acknowledge the financial support of Chinese Academy of Sciences (KSCX1-YW-09-04; KACX1-YW-0906; Visiting Professorship for Senior International Scientists, Grant No. 2009S1-37), Institute of Agricultural Development in Central and Eastern Europe, and The European Community (044255, SSPE).
- Issue published online: 4 JAN 2011
- Article first published online: 4 JAN 2011
Concerned about national grain self-sufficiency and rural household incomes, in 2004 China announced that it was planning to reverse its longstanding policy of taxing farm households and instead began to provide them with subsidies. Over the past five years, annual announcements have trumpeted rises in subsidies. Surprisingly, despite the historic turnaround of policy and the likely implication of this subsidy policy to China’s grain economy, there has been no household-level survey-based research that has sought to understand the effect of China’s subsidy programme on household behaviour. Using data from a national survey of more than 1000 households, we examine in detail a number of different dimensions of the subsidy programme. According to the survey-based findings, we have shown that although agricultural subsidies per farm are low, on per unit of cultivated area basis or total amount of budget, the subsidies are high. Almost all producers are receiving them. Subsidies are mostly being given to the land contractor, not the tiller. Most importantly, the subsidies appear to be nondistorting. No matter if we look at descriptive statistics in tables, scatter plots or regression analyses, there is no evidence that grain subsidies are distorting producer decisions in terms of grain area or input use decisions.