It is nine months since China joined the World Trade Organization (WTO) late last year. During this period, China's imports and exports of farm produce have increased in a steady and balanced way. But the WTO entry has also had some impact on the country's agriculture.
While enjoying the export opportunities brought by the WTO membership, China has seen a block in the export of some products. Exports of such labor-intensive products as vegetables, aquatic products, pork, and tea have not increased as much as expected.
In January of this year, China adjusted the import tariff rates on more than 5,000 commodities, dropping its overall tariff rate to 12 percent. It abolished import limits on grains, wool, cotton and chemical fertilizers. This opened the domestic wheat market wider to major foreign wheat producers such as the United States, Canada, Australia and France.
Generally, the increased import of large quantities of low-price farm produce constitutes a serious threat to domestic agriculture.
The domestic production and circulation of wheat, corn, soybean, barley, cotton, sugar-yielding and oil-yielding crops, have suffered from a rising influx of imports. The area sown in cotton in the spring of 2002, for example, dropped considerably due to a continual drop in cotton prices, the result of an increasing supply of cotton in the market.
In the first half of 2002, farmers sold off a great part of their grain reserves, a manifestation of their worry that grain prices would drop because of increased imports as a result of WTO entry.
The WTO pressure is more readily apparent in China's agricultural restructuring.
Domestically, the major agricultural producers are individual farmers. Agricultural enterprises are only in their initial stage of development. It is therefore urgent to conduct agricultural restructuring to industrialize and marketize agricultural production to cope with the WTO challenge.
China's WTO entry has also brought market pressures resulting from the introduction of biotechnology.
Genetic modification technology can greatly increase production and China's research level in this respect is among the highest in the world.
But given the uncertainty about its safety, the country has only permitted the production of genetically modified cotton and tomatoes.
However, backed up by huge government subsidies, the US farmers have started to produce and export genetically altered soybeans on a large scale. China imported US$1 billion worth of soybeans from the United States last year, a tonnage equal to the total domestic production of soybeans that year.
In May 2002, the US Farm Security and Rural Investment Act was passed, under which the US Government will invest US$190 billion in agriculture in the next decade, increasing subsidy levels by 80 percent.
These subsidies will make US genetically modified soybeans produced for the Chinese market cheaper, thus exerting more pressure on Chinese soybean producers.
The urgent task for the Chinese Government is to hammer out a coherent and comprehensive strategy to enhance the competitiveness of domestic agricultural products.
First off, it should make efforts to protect natural resources, including water, land, and biological resources, which are the basis of sustainable growth in agriculture.
The shortage and contamination of water, for example, have affected the sustainable growth of agriculture and menaced the quality of farm produce.
Water-conserving farming methods should be developed and encouraged, especially in those areas short of water. The proposed project of diverting water from the South to the North should be hastened to ease the resource and ecological crises in the North.
The use of farm chemicals must be strictly controlled to prevent water and soil from being contaminated and water and soil quality must be monitored constantly.
While preserving natural resources, human resources must be tapped to improve the overall competitiveness of agriculture.
In the country that has the most farmers in the world, educating and training farmers has got to be the most essential way of supporting agriculture. It is the prerequisite for other kinds of support for the sector.
With the country's entry into the WTO, Chinese farmers are facing more psychological pressure, because they, by themselves, are not able to cope with the influx of cheap foreign farm produce. The government must step in to help them improve their educational level and ease the pressure of outside competition.
The government should consider establishing special schools for farmers under the agricultural, economic, and science colleges, where farmers can acquire farming and marketing knowledge. By equipping farmers with knowledge about technology, marketing and law, the government will raise their competitiveness and boost the long-term growth of agriculture and the rural economy.
Farmer education should be recognized as crucial to the support of agriculture. And this way of supporting agriculture is more in line with the spirit of the WTO rules.
The government should also increase other subsidies in agriculture. The fiscal departments should focus on the spread of scientific knowledge, professional training of farmers, construction of infrastructure in rural areas and the preservation of resources and the ecological environment.
The government should subsidize the establishment of a farm produce market information network and provide consultancy service on food safety, hygienic monitoring and legal assistance.
The authors are researchers with the Institute of Economics under the Chinese Academy of Social Sciences.
(China Daily September 4, 2002)
