9. China
The share of support to agricultural producers in the People’s Republic of China (hereafter “China”) averaged 14.8% of gross farm receipts in 2019-21. This is three times higher than in 2000-02 but remains on par with the average support during 2016-18 (14.5%), when reforms were implemented in market intervention for soybeans, rapeseed, cotton and maize, and in the minimum purchase price for wheat and rice. These reforms stabilised support levels after two decades of steady growth.
The increase in producer support in 2019-21 is largely driven by a significant increase in market price support (MPS) for grains and oilseeds against a backdrop of domestic prices rising faster than border prices. Minimum purchase prices for wheat and rice were increased in 2020-21, while constraints in the supply of maize and soybeans for animal feed and groundnuts have led to large increases in domestic prices and imports for these commodities. In addition, domestic prices for livestock commodities such as beef or poultry meat have been increasing due to more demand for these products in response to tighter supplies of pig meat. Furthermore, area payments to maize and soybeans increased to support production in these sectors. Area payments within the Agricultural Production Development increased to offset rising production costs, and contributed to the overall increase in support in 2020-21.
Payments based on planted area have consistently increased since 2014 as a result of the recent reforms, but MPS remains the dominant part of total support, generated through both domestic price support policies and various border measures on imports. Overall, more than two-thirds of support to producers is in the form of potentially most-distorting transfers, a consistent share since 2000-02.
MPS levels differ across imported commodities, while prices of exported commodities are not supported. Except eggs, apples, and other fruit and vegetables that are exported, producers benefited from transfers of 8% to 58% of commodity receipts in 2019-21. Prices received by farmers were 14% higher on average than world prices in 2019-21. Higher domestic producer prices on average indicate an implicit tax on consumers, with a percentage consumer support estimate of –12.7% in 2019-21.
Within the general services support estimate (GSSE), which corresponds to 12.2% of total support to agriculture in 2019-21, three categories attract the largest financial support: public stockholding; development and maintenance of infrastructure; and the agricultural knowledge and innovation system. However, at 2.2% relative to the value of agricultural production, the GSSE is below the OECD average. Total support to agriculture as a share of GDP (%TSE) has remained relatively stable since 2000-02. At 1.8% in 2019-21, %TSE was nevertheless among the highest of countries covered, over three times the OECD average.
The 14th Five-Year Plan 2021-25 for National Economic and Social Development issued in March 2021 outlines among key priorities maintaining subsidies for grain producers and increasing minimum purchase prices for wheat and rice as appropriate. The November 2021 Five-Year Plan for Promoting Agricultural and Rural Modernization 2021-25 and the February 2022 Central No.1 Document set the mid-term objective of annual production of grains at a minimum of 650 million tonnes. In this context, the National Development and Reform Commission (NDRC) in February 2021 raised the minimum purchase prices for indica rice and wheat by 1%. In October 2021, the NDRC increased the minimum purchase price for wheat for procurement in 2022 by 1.8%. In February 2022, minimum purchase prices were increased for early indica rice by 1.8% and for late indica and japonica rice by 0.8%.
In June 2021, the Ministry of Agriculture and Rural Affairs (MARA) provided an additional CNY 20 billion (USD 3.2 billion) subsidy to grain farmers to address increasing input costs. This was incorporated into the programme of Agricultural Production Development and extended in March 2022 for another year.
In December 2021, MARA released the 14th Five-Year Plan for the Development of the Livestock Sector, consolidating the self-sufficiency rates set by the State Council in 2020 for the livestock sector: 95% for pig meat production; 85% for beef and mutton; 70% for milk; 100% for poultry and eggs. Starting in January 2022, the tariffs for pig meat and pig meat products were also raised from 8% to 12%.
In October 2021, the General Administration of China Customs (GACC) introduced new customs regulations requiring additional inspections of fertiliser exports. The new inspection requirements cover 29 categories of fertilisers.
The Regulations on the Registration and Administration of Overseas Producers of Imported Food (General Administration of Customs China Decree 248) entered into force on 1 January 2022. The regulations require all foreign food manufacturers, processors and storage facilities to be registered with Chinese authorities to export agri-food products to China.
China’s Nationally Determined Contribution (NDC) recognises agriculture’s importance to its economy-wide emission-reduction target (peak CO2 emissions by 2030) and its objective to achieve carbon neutrality by 2060, but no targets have been set for the sector. Nevertheless, several sector-specific policy efforts aim to mitigate greenhouse gas (GHG) emissions by focusing on fertiliser efficiency, lowering emissions from rice cultivation, agricultural biogas production, improved livestock feed and farming practices, conversion of cultivated land at risk of erosion to forest, and food waste reduction. These efforts should be enhanced and the monitoring of their impacts on GHG emissions improved through well-defined targets. In this sense, the implementation of the National Agriculture Green Development Plan 2021-25 – a joint effort between various ministries and institutions – can provide the tools for the monitoring of GHG mitigations practices at farm level and along the value chain.
Several plans were put forward across institutions including MARA and the Ministry of Ecology and Environment to strengthen policies supporting the sector’s adaptation to climate change. In this context, the implementation of the National Agriculture Green Development Plan 2021-25 could also help mainstream and co-ordinate adaptation policy objectives across current and planned programmes, including better targeting of extension services for farmers.
The reforms introduced until 2016 to replace intervention prices for key crops by direct payments based on area planted are a positive step in the direction of rebalancing the policy portfolio. This reflects China’s increasing policy orientation towards long-term productivity growth and sustainability. The reform of the maize purchasing and storage system towards direct payments eased the burden of public stockholding costs, which still represent the largest expenditure share in general services support. Such reforms could be gradually extended to include wheat and rice. If direct payments to farmers are maintained over a longer-term, the link between these payments and production decisions should be loosened, for instance by providing payments on a historical area basis, and ‘greened’ by making them conditional on environmentally friendly production practices.
To establish a solid framework for agri-environmental policies, China should define environmental targets adapted to local ecological conditions and strengthen monitoring mechanisms for the enforcement of environmental regulations. In this sense, the soil environmental information platform and monitoring system with regular soil examinations – under the 2019 Soil Pollution Prevention and Control Law – needs to be implemented and can set the stage for similar efforts relating to water use in agriculture. More specifically, in implementing the 2021 regulation on groundwater conservation and protection, a comprehensive review of water governance could better define responsibilities, remove conflicts, and ensure effective policy implementation.
Public expenditures on general services increased but at a slower pace than support to individual producers, and fail to keep pace with sector growth. More efforts are needed to restructure agricultural support towards public investment in R&D and agricultural infrastructure. Further investments in sanitary inspection and control services will be key for implementation of the revised provisions of the Food Safety Law, the envisaged nation-wide surveillance system for diseases and pests, and the consolidated recovery of the pig meat sector, affected by African swine fever.
Additional investments in innovation can enhance the current efforts relating to R&D in GHG mitigation in the livestock sector – the primary contributor to agricultural emissions. This restructuring of public expenditure can be achieved by scaling down input subsidies, such as the subsidy to purchase farm machinery, and ensuring that support through direct payments has only a transitory role in backing farmers’ adjustment to a new market environment.
Reforms to land transfer rules have been contributing to the emergence over the past decade of large family farms, co-operative farms, and farms run by agri-business companies. To continue delivering expected outcomes, increased investments in education and training and improved access to financial services need to complement these reforms.
Overview of policy trends
The evolution of China’s agricultural policy objectives reflects the changing role of agriculture at different stages of economic development. In the 1950s and 1960s, the agricultural sector was taxed to support the industrial sector’s development. In the late 1970s, China initiated an important economic transformation process, implementing reforms towards a market-oriented economy with a direct impact on agriculture (OECD, 2005[1]; OECD, 2018[2]). China implemented its first rural reform, the household responsibility system (HRS), during 1978-84. This dismantled the people’s communes and contracted cultivated land to individual households, mostly based on the number of people or labourers in the household.1
Until the late 1990s, agricultural policies focused on increasing food production, particularly grains, through the provision of fertiliser and other input subsidies to farmers. At the same time, policy actions targeted deregulation and diversification of marketing channels. Central and local governments allocated increasing support for irrigation.
Liberalisation of international trade started in the early 1990s with relaxation of trade restrictions and allowing private traders to play a role in agricultural commodity markets. In the context of China’s WTO accession in 2001, the average import tariff for agricultural products fell from 42% in the early 1990s to 12% in the early 2000s.
In the 2000s, the growing income gap between urban and rural populations, and between developed and underdeveloped rural areas became an important policy issue. Increasing farmers’ income was included among the key policy objectives together with food self-sufficiency2 in several of the No. 1 Central Documents3 during the 2000s. The importance of improving farmers’ incomes was reflected in the introduction of minimum purchase prices for grains, the temporary purchasing and storage system, and subsidies for agricultural materials, superior crop varieties, and agricultural insurance premiums.
Moreover, many of the No. 1 Central Documents emphasised other policy goals, such as ensuring the quality of agricultural products and food safety, enhancing agricultural competitiveness, and protecting the agricultural ecosystem. In the early 2000s, China introduced agri-environmental payments under programmes such as “Grain for Green” (officially called the Returning Farmland to Forests Programme), converting grazing land to grassland, or Grassland Ecological Protection.
In 2014, China further promoted land reforms through the “three rights separation system” into village collective landowner rights, individual household land contract rights, and land operation rights. These aimed to consolidate farm operations and contribute to productivity growth. To control the conversion of farmland for non-agricultural use, a “red line” on arable land was set at no less than 124.3 million hectares in the 2016 Adjusted Scenario of the Outline of the National Overall Planning on Land Use.
Reforms to the government-led temporary purchase and storage policy for cotton, soybeans and rapeseed at pre-determined prices were introduced in 2014-15, and 2016 for maize. For cotton, this was replaced by compensation payments covering the difference between pre-determined target prices and actual market prices. For soybeans and maize, it was replaced by direct payments based on area planted. In 2016, China also merged all subsidies on grain, seed and aggregate inputs into a single general income support payment. While wheat and rice remained subject to the minimum price procurement programme, support prices were gradually reduced between 2015 and 2019. In 2020, during the COVID-19 pandemic, the minimum support price was increased again for indica rice.
In 2017, China introduced a rural revitalisation strategy to close the urban-rural development gap. The rural revitalisation strategy foresees support to general services to increasingly contribute to the development of agro-food supply chains.
At the end of the 1990s, China’s support to the agricultural sector mostly comprised budgetary allocations while market price support (MPS) was negative. Budgetary allocations went to input subsidies and general services to the sector. However, since 2002, MPS increased and became the main instrument to support agricultural producers. After 2009, China continued to increase its minimum support prices, leading to significant price gaps between domestic and international markets. Support to farmers increased until 2015, when reforms to commodities such as rapeseed, soybeans, cotton and maize contributed to lowering MPS. Since 2020, MPS has been increasing particularly for imported grains and oilseeds, against a backdrop of higher domestic and reference prices. This has led to higher overall support to agricultural producers in 2020-21, following a period of gradual decrease during 2016-19. MPS accounts for more than two-thirds of PSE, followed by budgetary support for payments based on current area and input subsidies (Figure 9.4).
Main policy instruments
Market price support is the main channel for providing support to Chinese farmers. It is provided through both domestic price policies, such as the minimum purchase prices for wheat and rice, and trade policies, including tariffs, tariff rate quotas (TRQs) and state trading.
The minimum purchase prices for wheat and rice are set every year by the National Development and Reform Commission (NDRC) in consultation with the Ministry of Agriculture and Rural Affairs (MARA), and other government institutions. Their application is limited to major wheat and rice producing provinces. The minimum purchase prices for wheat and rice are announced before sowing seasons, and only apply for several months after the harvest. The central government mandates that state-owned China Grain Reserves Corporation (Sinograin) and other state-owned companies undertake intervention purchases in case market prices fall below respective minimum prices. Only grain of national grade 3 or higher4 can be purchased at minimum prices since 2018. However, in situations with large volumes of grain below grade 3, such as in cases of extreme weather events, provincial authorities can also purchase these under temporary reserves. Minimum price procurement can begin only when the market price has fallen below the minimum price for three consecutive days, and must be suspended when the market price rises above the minimum for three consecutive days. Ceilings on the volumes of grains procured at minimum purchase prices during a marketing year have been set at 37 million tonnes for wheat (since 2019) and at 50 million tonnes for rice (since 2020).
Budgetary transfers to specific commodities include compensatory and direct payments. Compensation payments cover the difference between pre-determined target prices and actual market prices for cotton producers, and are a combination of output payments and area payments. Direct payments based on area planted are provided for soybeans and maize producers.
Other key budgetary programmes include: the “Agricultural Production Development” subsidy5 paid on per unit of land basis, combining direct payments for grain producers, subsidies for agricultural inputs, and subsidies for improved seed variety; subsidies for purchases of agricultural machinery; subsidies for land consolidation; subsidies for farmland irrigation construction; subsidies for agricultural insurance schemes; subsidies for returning farmland to forests and excluding degraded grassland from grazing.
Public stockholding of grains and programmes supporting the development of agricultural infrastructure (including irrigation and drainage facilities) represent the most important categories of general services. Expenditures related to agricultural knowledge and innovation are also sizable.
The National Agricultural Sustainable Development Plan 2015-2030 sets the goals and pathways in terms of natural resources protection and farming practices that are protective of the environment. It also includes a focus on production quality and efficiency. In this sense, the plan sets priorities for different zones by taking into account their capacity for agricultural production, resource endowments, and ecological characteristics (Ministry of Agriculture and Rural Affairs, 2015[3]). Moreover, 220 high-standard dry-farming and water-saving agricultural demonstration areas have been established in dry farming areas in North and North-west China, to demonstrate and promote technologies such as: water storage and soil moisture conservation; rainwater harvesting and supplementary irrigation; ridge tillage and furrow irrigation; soil-moisture based on-demand irrigation; water-saving irrigation; water and fertiliser integration, and drought and stress resistance; and water resource efficiency.
Climate change mitigation policies in agriculture
Primary agriculture is responsible for 6.7% of China’s gross GHG emissions, slightly lower than the OECD average. Most agricultural emissions originate in livestock farming (42.8%), followed by emissions from agricultural soils (34.1%) and rice planting (22.1%).
China ratified the Paris Agreement on Climate Change on 3 September 2016. Its NDC, submitted in 2016 and updated in 2021, explicitly mentions agriculture, land-use change and forestry, among other sectors, but no specific net-emission target has yet been set for the agricultural sector. The commitments covered by the updated NDC are economy-wide and acknowledge the role of agriculture in achieving these: to peak CO2 emissions by 2030 and carbon neutrality by 2060; to lower the carbon intensity of GDP 65% below 2005 levels by 2030; to increase the share of non-fossil fuels to around 25% of primary energy consumption; to increase forest stock volume 6 billion m3 from the 2005 level; and to bring total installed capacity of wind and solar power to over 1.2 billion kW by 2030 (State Council, 2021[4]).
The only specific quantitative target set in the NDC for agriculture relates to achieving zero growth in fertiliser and pesticide utilisation by 2020, which MARA reported as achieved in 2018. Other broad objectives in the NDC concern controlling methane emissions from rice fields and nitrous oxide emissions from farmland, promoting comprehensive utilisation of straw, or reutilisation of agricultural waste (UNFCC, 2021[5]; Climate Action Tracker, 2021[6]).
In 2016, the State Council released the 13th Five-Year Work Plan to Control GHG Emissions, looking to strengthen policies controlling GHG emissions besides CO2, such as methane and hydrofluorocarbons (HFCs). The plan included targets for the agriculture and land use, land-use change and forestry (LULUCF) sectors. It aimed to reduce CH4 emissions from the agricultural sector, although a quantitative emissions reduction target was not specified. It also aimed to modernise agricultural production to reduce over-utilisation of land and convert 1 million hectares of marginal cropland into forest or grassland. Targets set for the LULUCF sector included an increase in forest coverage to 23% by 2020, stable arable land at 124.3 million hectares by 2020, and grassland vegetation coverage of 56% by 2020 (NDRC, 2017[7]).
Demonstrations of fertiliser reduction and efficiency enhancement were carried out in 300 counties across China, including fertiliser-saving technologies such as deep placement of fertilisers.6 In 2021, 75% of livestock and poultry manure was treated and turned into either fertiliser or gas (Ministry of Ecology and Environment, 2021[8]).
Two action plans support agricultural biogas development in China. The Agricultural Biogas Development Plan 2017 aims at reducing China’s GHG emissions 46 MtCO2eq by 2020 by increasing agricultural biogas and digestate fertiliser production. The Bioenergy Development component of the 13th Five Year Plan supports biogas production by establishing 160 demonstration counties by 2020, more specifically to increase solid digestate fertiliser consumption to 10 million tonnes, liquid digestate fertiliser consumption to 50 million tonnes, straw utilisation to 83% and livestock waste utilisation to 70%. The Plan also targets a 10% reduction in ammonia nitrogen pollution (Ministry of Ecology and Environment, 2019[9]).
Several forestry programmes, primarily involving increased afforestation and improved forest management, support NDC objectives of increasing the forest stock volume and GHG emission reductions in the LULUCF sector. The Grain for Green programme, implemented since 2000, uses direct payments to incentivise farmers to re-establish forest and shrub vegetation on sloped cultivated land at risk of erosion. It aims to afforest large tracts of barren land. The programme is estimated to have achieved 29 million hectares of afforestation, including converting 9 million hectares of cropland to forestland. The Forest Management Plan 2016-2050 also includes guidelines for forestry maintenance and restoration, for the development of forest management plans at provincial and county levels, and for piloting sustainable forest management programmes.
Research initiatives support GHG mitigation in China’s agricultural sector. In 2018, China launched several research projects on GHG emissions mitigation from livestock as part of a research collaboration between Chinese agencies: the Research Program on Climate Change, Agriculture and Food Security (CCAFS); the Sino-Dutch Dairy Development Centre (SDDDC); Wageningen University & Research, Global Research Alliance (GRA); and with the private sector. The objectives include identifying sustainable dairy farming practices, especially from novel feeds (such as lignin degradation of maize or rice straw), and providing accurate estimates of emission reductions from these changes in dairy farming practices.
In September 2021, China released the 14th Five-Year National Agriculture Green Development Plan 2021-25, issued jointly by MARA, the NDRC, the Ministry of Science and Technology (MOST), the Ministry of Natural Resources (MONR), the Ministry of Ecology and Environment (MEE), and the State Forestry and Grassland Administration (SFGA) (State Council, 2021[10]). Policy objectives and areas for action include:
Reduce usage of fertilisers and pesticides and increase application efficiencies.
Build a green and low-carbon agricultural industry supply chain to improve agricultural production quality, efficiency and competitiveness by: setting up 800 green standardised agricultural product production bases, 500 standardised demonstration farms for livestock and poultry, and creating more than 1 800 agricultural brands; formulating and revising 1 000 industrial standards related to agricultural green production; supporting green, organic, and geographical indication certification of agricultural products (certified products should reach over 60 000 and the number of production enterprises should reach 27 000).
Carry out research and apply agricultural green production technologies such as soil improvements, waste recycling, and green processing; and research and develop green inputs such as efficient and biological fertilisers, soil conditioners, high-efficiency, low-toxicity and low-residue agricultural and veterinary drugs, feed additives, and degradable mulching films.
Improve compensation mechanisms for ecological protection and establish a price mechanism for green products.
Domestic policy developments in 2021-22
In March 2021, the Central Committee of the Communist Party of China (CCCPC) released the 14th Five-Year Plan 2021-25 for National Economic and Social Development. The plan outlines specific key priorities in the area of agriculture modernisation: enhancing food security, including by safeguarding a minimum arable land area of 120 million hectares; maintaining subsidies for grain producers and increasing minimum purchase prices for wheat and rice as appropriate; implementing high-standard infrastructure and conservation projects, which could also advance the development of green agriculture; investing in innovative farm technologies and smart agriculture7 systems, including with respect to seeds and animal breeding; and improving pest and disease control systems (Cheng and Shi, 2022[11]). In addition, regarding the acceleration of the “rural revitalisation” strategy, the plan foresees increased investments in rural infrastructure and financial services, agro-food supply chains and agri-businesses, further rural land reforms, and diversification of income generation activities, such as through rural eco-tourism. The plan also promotes the “dual circulation” strategy at an economy-wide level, increasing the emphasis on the domestic market relative to export development.8
In November 2021, the State Council issued the 14th Five-Year Plan for Promoting Agricultural and Rural Modernization 2021-25 setting the mid-term objective of an annual production of grains at minimum 650 million tonnes and of meat at 89 million tonnes, baselines set to maintain food security (State Council, 2021[12]). The Plan also emphasises consolidating the achievements of poverty reduction in rural areas, supporting agricultural innovation and seed development, and conducting new surveys on agricultural production costs to target agricultural insurance programmes and subsidies.
China released its No. 1 Central Document for 2022 on 22 February 2022, calling for a continuous and comprehensive promotion of rural revitalisation. The No. 1 Central Document reinforces the objective for an annual production of grains at 650 million tonnes. In addition, it emphasises e-commerce, tourism and logistics for the development of rural areas. The No. 1 Document also promotes the increase of soybeans and other oilseeds production capacity, through better targeted subsidies for oilseed-producing counties, conversion of rice cropland to soybeans in parts of the Heilongjiang province, intercropping of soybeans with maize in alternating rows, as well as planting rapeseed on fallow land in the Yangtze River valley and soybeans on saline soil (State Council, 2022[13]).
Following the minimum purchase price increases in 2019-20, the NDRC raised in February 2021 the minimum purchase prices for indica rice and wheat by 1%. In October 2021, the NDRC increased the minimum purchase price for wheat for procurement in 2022 by 1.8%. In February 2022, minimum purchase prices were increased for early indica by 1.8% and for late indica rice and japonica rice by 0.8%.
Against the backdrop of increasing industry demand and domestic prices for cotton, auctions were held during October and November 2021 for cotton from state reserves. The daily volume for auctions was established at 15 000 tonnes and the starting purchase price set as the average of the domestic market spot price index and the international market spot price index (CnCotton, 2021[14]).
In June 2021, MARA provided an additional CNY 20 billion (USD 3.2 billion) subsidy to grain farmers in order to offset increasing input costs. The subsidy was incorporated into the programme of Agricultural Production Development (paid per unit of land). At least 25% of the subsidy would be provided by provincial governments; in selected provinces in the centre, western and north-eastern regions, at least 45% of the subsidy would be provided by provincial governments (Ministry of Agriculture, 2021[15]). In March 2022, this policy was extended for another year and thus an additional CNY 20 billion (USD 3.2 billion) subsidy will be allocated in 2022 to grain farmers in order to offset continued rising input costs.
In September 2021, MARA introduced the Interim Implementation Plan to Manage Swine Production Capacity. The plan requires for the national sow inventory to be maintained at approximately 41 million animal heads per year during 2021-25. The inventory cannot be lower than 37 million animal heads (i.e. 90% of the target). The plan provides targets for each province’s sow inventory; if a province’s sow inventory fluctuates above or below 5% of its target, the central government can introduce measures such as the culling of inefficient sows and provide subsidies to restore the sow inventory (Ministry of Agriculture, 2021[16]).
In December 2021, MARA also released the 14th Five-Year Plan for the Development of the Livestock Sector. The plan reiterates the self-sufficiency rates set by the State Council in 2020,9 namely: 95% for pig meat production; 85% for beef and sheep meat; 70% for milk; 100% for poultry and eggs (Ministry of Agriculture and Rural Affairs, 2021[17]). The plan focuses on scaling up farms, becoming self-sufficient in producing breeding stock, stabilising supply, preventing disease, reducing the industry's environmental footprint, filling a shortfall in fodder for ruminants, and enhancing supply chains between farmers and downstream processors.
In April 2021, MARA released new guidelines to reduce the amount of maize and soymeal used in pig meal and chicken feed. Alternative crop sources were proposed to substitute maize feed (e.g. wheat, sorghum, barley, rice and cassava) and soymeal (e.g. rapeseed meal, cottonseed meal, peanut meal, sunflower meal, distillers dried grains, palm meal, flax meal, sesame meal and other maize processing by-products).
In November 2021, MARA published a draft document proposing regulatory changes in the approval procedures applying to genetically modified (GM) maize crops and seeds. The regulations could facilitate the commercial cultivation of GM maize in China (AMIS, 2021[18]).
The Law of the People’s Republic of China on Food Waste entered into force in April 2021. The law covers a wide range of stakeholders in the agricultural sector, transport, processing, catering as well as individuals in implementing anti-food waste measures. Moreover, national food and strategic reserves authorities have to also reduce losses in grain transportation and storage (National People's Congress, 2021[19]).
A new regulation on groundwater use entered into force in December 2021. The regulation sets out specific rules for the use, conservation and protection of groundwater with the objective to enhance groundwater supervision and management. The regulation designates areas where the exploitation of groundwater is prohibited and entitles provincial-level authorities to address over-exploitation and pollution.
Trade policy developments in 2021-22
The Regulations on the Registration and Administration of Overseas Producers of Imported Food (General Administration of Customs China, GACC - Decree 248) entered into force on 1 January 2022. The regulations require that all foreign food manufacturers, processors and storage facilities to be registered with Chinese authorities in order to export agro-food products to China. The regulation sets out two registration pathways for facilities that produce goods within its scope – registration by a competent authority located in the exporting country for 18 product categories10 defined by GACC or self-registration for others (i.e. all other food products except food additives). Either the GACC facility registration number or the facility registration number issued by the competent authority in the exporting country must be printed on the inner and outer packaging of products produced starting 1 January 2022.
Starting October 2021, the GACC introduced new customs regulations requiring additional inspections of fertiliser exports.11 The new inspection requirements cover 29 categories of fertilisers (General Administration of Customs of China, 2021[20]).
China applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in September 2021. China currently has bilateral or regional free trade agreements with eight CPTPP members (including the Regional Comprehensive Economic Partnership, RCEP12, which entered into force on 1 January 2022). In those agreements, most tariffs on agricultural products have been eliminated or are close to elimination. An accession to the CPTPP could mainly benefit China’s agricultural trade with Canada and Mexico, as both of these partners do not yet have a bilateral trade agreement or take part in a regional trade agreement with China (GAIN CH2021-0161, 2021[21])
In July 2021, GACC published Announcement No. 50 on the Implementation of a Notification and Commitment System on Certification Items of the Testing Report for Imported Dairy Products. The notification and commitment system allows importers (or Customs brokers) to provide a letter of commitment to clear Customs, instead of the original testing report, for first-time dairy imports. Importers (or Customs brokers) may also continue to submit the original testing report for customs clearance.
Starting January 2022, the tariffs for pig meat and pig meat products are raised from 8% to 12%. Tariffs for orange juice are raised from 15% to 18%. Tariffs on whole or broken cocoa beans are eliminated (Ministry of Finance, 2021[22]).
In January 2022, the State Council issued the first five-year plan on the protection and utilisation of Geographical Indications (GIs) (State Council, 2022[23]). The objectives of the plan are to: improve the foundation for establishing and protecting GIs; improve the utilisation, branding, and marketing of GIs; and expand the mutual recognition and protection of GIs. The plan promotes the implementation of the China – European Union Agreement on Protecting GIs as well as the negotiation of international mutual recognition and mutual protection of GIs with more countries.
On 24 February 2022, the GACC approved imports of wheat from all regions of the Russian Federation, following an initial agreement reached on 8 February 2022. Imports of wheat were not previously allowed due to concerns regarding possible fungus and other contamination. The protocol approving imports underscores the importance of adequate pest monitoring in production areas, grain transportation and storage sites; the need for prevention, inspection and control measures; appropriate information exchange and notification on disease surveillance and risk assessments; and delivery of phytosanitary certification (World-Grain, 2022[24]).
Trade policy responses to the COVID-19 pandemic
Identification of traces of SARS-CoV-2 in the autumn of 2021 on dragon fruit imported from Viet Nam and longan fruit imported from Thailand led to temporary shutdowns of selected supermarkets and tighter screening and controls at produce markets selling these fruits in China. This also led to suspending dragon fruit imports from Viet Nam one week in September 2021 in addition to reinforced border controls and quarantine measures at land border crossings over the past months (SCMP, 2022[25]).
China has the world’s largest population and the second largest land area. It is an upper-middle income economy, with a GDP per capita – adjusted by PPP – close to 82.7% of the average of countries covered by this report (Table 9.3). However, while counting almost 20% of the world’s population, it has only 7% of the world’s potable water and 10% of the world’s agricultural land. China is thus a resource scarce country, which results in severe competition between agriculture and other users of land and water resources.
Agriculture accounts for 24.7% of employment, but its 8% share of GDP indicates that labour productivity is significantly lower than in the rest of the economy. Even if rural incomes are growing at high rates, they remain at around one-third of those in urban areas.
Crop production represents 64% of total agricultural output and its composition has changed significantly over the last decades, driven by the shift towards higher value-added agricultural products such as fruit and vegetables. While the average farm size remains less than one hectare, large-scale production has been developing rapidly, including among co-operative and corporate farms. North and northeast provinces have seen more rapid farm consolidation than other regions, as increased labour mobility and the transfer of land among farmers over the past three decades have led to adjustments in the farm structure. Livestock production originates mostly from larger-scale commercial units (OECD, 2018[2]).
Real GDP growth averaged 5.4% in 2019-21 (Figure 9.5). China experienced one of the strongest economic growth rates among G20 economies since the COVID-19 crisis, supported by strong industrial activity and a boost in exports in 2021 against a backdrop of increasing demand in other major economies. This followed a period of gradual slowdown in economic growth since 2012. Unemployment only slightly increased in 2020, as the economy was supported by the COVID-19 fiscal support policies. Following an inflation higher than 2% in 2019-20, when food inflation was driven by higher pig meat prices due to the African swine fever outbreak and related supply constraints, this decreased at 1% in 2021.
China has consistently been a net agro-food importer since 2003, but agro-food exports have been growing over the last two decades. While agro-food exports stabilised since 2018, agro-food imports have been increasing at a higher rate during this period. The significant increase in agro-food imports since 2020 has been driven by higher imports of grains and oilseeds, particularly maize and soybeans. Primary products used as inputs in the domestic food industry dominate China’s agro-food imports, representing 39% of the total in 2020. In turn, primary and processed products for final consumption are key export categories, accounting for 71% of total agro-food exports (Figure 9.6).
Agricultural output growth in China averaged 2% in 2010-19, on par with the world average (Figure 9.7). This has been driven by growth in total factor productivity (TFP) of 1.7% per year, higher than the global average and largely attributed to farm consolidation and increased mechanisation of production.
The contribution of primary factor growth to agricultural output growth (0.3%) is also on par with the world average (0.4%). The sustained growth in agricultural output is exerting pressures on natural resources such as land and water. While nutrient surplus intensities for nitrogen and phosphorus have been declining over the past two decades, these remain at high levels, particularly for phosphorus relative to the OECD average (Table 9.4). Agriculture remains the key user of water, accounting for 61.2% of total water consumption, well above the OECD average. Water stress is more than twice as high as the OECD average.
References
[18] AMIS (2021), AMIS Market Monitor December 2021 Issue 94, http://www.amis-outlook.org/fileadmin/user_upload/amis/docs/Market_monitor/AMIS_Market_Monitor_Issue_94.pdf.
[11] Cheng, G. and J. Shi (2022), Background information for the 2022 Agricultural Policies Monitoring and Evaluation China chapter.
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Notes
← 1. Although ownership of land remained collective, control and income rights belonged to individuals under the HRS, with a land contract term of 15 years. When this ended in the late 1990s, the second term was extended to 30 years.
← 2. Interpreted to mean that China should produce 95% of its own grain requirements. The Chinese self-sufficiency rate for grains is defined as the total production of wheat, coarse grains and rice divided by total domestic consumption of these crops (OECD, 2005[1]).
← 3. The No. 1 Central Document is the most important policy document in China, issued jointly by the Central Committee of the Communist Party of China (CCCPC) and the State Council. This document determines the most important policy issues and focus of the year. Issues related to agriculture, farmers and rural areas have consistently been selected as the topic of this document since 2004.
← 4. The quality grade standard is divided into five grades plus a ‘sub-standard’ category.
← 5. Initially called “agricultural support and protection subsidy”.
← 6. This method ensures better distribution of fertiliser in the root zone soil and prevents loss of nutrients by run-off.
← 7. This focuses on providing the agricultural industry with the infrastructure to leverage advanced technology – including big data and the Internet of Things (IoT) – for tracking, monitoring, automating, and analysing farm operations.
← 8. The strategy of “dual circulation” was introduced in May 2020, placing an increased emphasis on the domestic market (or “internal circulation”) while gradually decreasing reliance on an export-oriented development model (or “external circulation”).
← 9. State Council 2020 Opinion on Promoting the High-quality Development of the Livestock Industry.
← 10. The 18 product categories defined by GACC are: meat and meat products; sausage casings; aquatic products; dairy products; bird nests and bird nest products; bee products; eggs and egg products; edible oils (and fats) and oilseeds; stuffed wheaten products; edible grains; milled grain industry products and malt; fresh and dehydrated vegetables and dried beans; condiments; nuts and seeds; dried fruits; unroasted coffee beans and cocoa beans; foods for special dietary purposes; health foods.
← 11. China accounts for approximately 30% of global trade in fertilisers.
← 12. RCEP comprises the ten economies that make up the Association of South East Asian Nations (ASEAN), Australia, China, India, Japan, Korea and New Zealand.