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A demand analysis for wheat imports to China

University of British Columbia

China has become an increasingly important, but uncertain, import market for grains since the 1960s. For past 35 years, the fluctuations in wheat imports between 2.3 million tonnes and 16 million tonnes has drawn the attention of economists and politicians around the world. In 1994, Lester Brown published a book titled "Who Will Feed China?—Wake-Up Call For a Small Planet". Since then, grain import demand in China has again become a globally important topic. Since 1978, China has reformed its economic system. These economic reforms and system transition in conjunction with the remains of the planning economy have been shaping China's economy into an economy with elements of both centrally planned and market-oriented economies, i.e. a 'mixed" economy. These reforms have had large effects not only on grain production but, more important, also on domestic grain demand, which in turn has had major effects on the international grain market. It is questionable whether conventional models of the demand for wheat are appropriate for China since China's wheat import demand is not purely market determined. Instead, an analysis of import behaviour must incorporate features of central planning. This study addresses the following questions: 1) what are the prominent characteristics of China's planned and mixed economic systems and what are the determinants of grain import demand under a mixed systems? 2) what role have price signals in the world grain market played in China's demand for wheat? This analysis also addresses questions such as what effects China's economic reform has had on domestic grain policies and what have been the major changes in grain trade policy-making procedures before and after 1978? Given the Chinese government's 'Unique" grain system, stated policy of grain selfsufficiency, and China's status as 'an enigma in the world grain trade", establishing a suitable model for Chinese wheat imports is a challenging job. In this study, a 'mixed " model has been developed. This 'mixed" model allows us to test the hypothesis that the regime shifted from a pure materials balance to a more marketing driven model where grain imports depend on prices and other market variables. The conclusion of this study is that China's wheat imports are still centrally controlled and the material balance principle still dominates the wheat imports planning. However, the price effect has more influence on China's wheat imports than it did before 1978.

Thesis/Dissertation

application/pdf

2009-03-25

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http://hdl.handle.net/2429/6463

Agricultural Economics

University of British Columbia

UBCV

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