China and the WTO: Implications for Grain Trade. Dr. Thomas I. Wahl IMPACT Center Washington State University

Transcription

1 China and the WTO: Implications for Grain Trade Dr. Thomas I. Wahl Center Washington State University

2 Overview of Presentation Background Why are we interested in China Current trade situation Demographics WTO Market observations Future trade patterns? Opportunities Summary

3 Why Are We Interested in China? China s s population: 1.2 BILLION 1.2 Billion of most things is a LOT

4 China s s Gross Domestic Product = Total GDP Per Capita GDP

5 China s s Imports and Exports, US$ Billions Exports Imports Balance

6 China s s Exports, % 5% Food, Live Animals, and Beverages Other Primary Goods Manufactured Goods 90% Source: China s Customs Statistics

7 China s s Imports, % 19% Food, Live Animals, and Beverages Other Primary goods Manufactured Goods 79% Source: China s Customs Statistics

8 China s s Ag Imports, US$ 100 Million Food, Live Animals, and Beverages

9 US Exports to China, Billion US$ Meat Fish Vegetables Fruit And Nuts Cereals Other Ag

10 US Exports to China, Billion US$ Meat Fish Vegetables Fruit And Nuts Cereals

11 China s s Population Billions Over 1.2 billion Rate of increase less than 1% By million more people More than another country the size of the US

12 Population Density Most population: Coastal provinces Arable land Higher rainfall areas

13 Arable Land Most of China is mountains Arable land Coast Northwest Far west

14 Age Distribution Age 0-14 Age Age 65+ N 302, ,749 92,398 % More than half of population is child bearing age 24% of population will reach child bearing age soon

15 Income 1,000 Yuan Rapidly increasing Urban more 2x rural Still less than US$1,000 per year Rural Urban

16 Consumer Goods # per 100 households Motorcycles Bicycles Automobiles 0.25 Washing Machines Refrigerators Freezers 4.80 Color TVs Video Disc Players Video Recorders Computers 3.78 Hi-Fi Stereos Ovens 8.49 Air Conditioners Electric Cooking Appliance Showers Health Equipment 3.03 Mobile Telephones 3.26 Have: Washing machines Color TVs Electric appliances Don t have: Autos or mobile phones Freezers or ovens Air conditioners

17 Living Space Sq ft Per Capita Urban Rural Increasing Urban 2x rural Less than 100 sq ft per person Small compared to US 2000 sq ft / 4 = 500 per person

18 Farming in China Typical farmer Farms 1-3 acres Grows wheat or rice, vegetables, corn, hogs Has 1 year of food grain stored onfarm

19 Wheat & Corn in China Irrigation Inefficient Poor technology Double cropping common Some large farms Small farms Tend part of a larger field

20 Wheat Production, Imports, Stocks Million MT Source: USDA, PS&D Dataset Production Imports Ending Stocks

21 Wheat Area & Yield Million Hectares Area Harvested Yield MT/Hectare Source: USDA, PS&D Dataset

22 Corn Production, Imports, Stocks, & Feed Use Million MT Source: USDA, PS&D Dataset Production Imports Ending Stocks Feed Use

23 Corn Acreage and Yield 30 6 Million Hectares Area Harvested Yield MT/Hectare

24 Wheat & Corn Acreage 50% 48% 46% 44% 42% 40% 38% 36% 34% 32% 30% Corn Wheat

25 Delivering Grain to the Government Buying Station

26 Small Tractor and 2 Wheeled Cart

27 More Traditional Method of Transportation

28 A Horse and Bigger Cart!

29 Migrant Worker Cleaning up a Melon Patch

30 Worker s s Housing

31 Sold 5 Kg of Melons to Get 1 Kg of Wheat

32 China s s Agricultural Policy Food security, self-sufficiency goals 95% for food grains Grain quota and ration policy Complex system of government purchases and sales Producers must deliver a portion of their crop to gov t at quota price

33 China s s Agricultural Policy Food price policy: Quota, negotiation, market prices Subsidizes consumers Taxes producers Trade policy State trading enterprises Rural labor transition and modernization

34 World Trade Organization (WTO) Requires access to markets Minimum access reduces state trading Transparency in grain market Producers respond to world prices

35 China s s Joining WTO Government buying system should disappear Change import restrictions to tariff rate quotas (TRQs) In-quota tariff low Out-of-quota tariff high TRQs set at minimum access levels

36 Assessing China s TRQs Developed model to assess effects of China joining WTO Simulation model Wheat, corn, rice 1985 to 1998 Simulate through 2010

37 TRQ Simulation Model 3 scenarios Baseline average tariffs TRQs 2000 TRQs for China, TRQs for China, Complete liberalization

38 China s s Tariff Schedule Wheat /114 Commitment Initial 2004 WTO TRQ TRQ 1/ Corn 35/114 1/ Rice 1/114 1/

39 China: Wheat Production Thousands Baseline TRQ LIB

40 China: Wheat Imports Thousands Baseline TRQ Lib

41 Overall Effects of WTO on China Issues Transportation Storage Marketing Quality Comparative/competitive advantage

42 Improved Roads Railroads Trucks available Produce moving easily Transportation

43 Storage Cold storage limited CA storage limited Port facilities improving Rural grain storage is poor On-farm storage poor 1-2 years on farm

44 Marketing Markets are developing Most are open-air farmers markets Roadside Urban Wholesale

45 Roadside Markets

46 Wholesale Market

47 Quality varies Quality Grain quality poor Storage problems Fruit & vegetable quality variable Storage problems Some very good Quality is not up to world standards yet!

48 Comparative Advantage and Trade Import land intensive goods Food grains wheat Beef High cost of production Export labor intensive goods Fruits & Vegetables Pork Low cost of production

49 Effects of WTO on China Wheat China s wheat production will decrease Quality issues Increased imports Increased demand for bread, cakes and cookies

50 Effects of WTO on China Corn Increased production of pork will increase demand for corn Corn production will increase Imports will not increase much

51 Effects of WTO on China Apples China is the world s largest producer Low cost of production Increased exports of fresh and juice Quality is improving

52 Opportunities Wheat exports Better quality Beef exports Hotels and restaurants Milk products Ice cream High quality processed products Hotels and restaurants

53 Opportunities China is becoming quality conscious Price wars vs quality Market is beginning to move to the next stage Brand names are important Western brand names are very popular

54 Conclusions China is an appealing market Market for higher quality products Wheat imports will likely increase Opportunities exist!

55 China and the WTO: Implications for Grain Trade Dr. Thomas I. Wahl Center Washington State University