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Fighting global food price rises in the developing world: the response of China and its effect on domestic and world markets
Author(s) -
Yang Jun,
Qiu Huanguang,
Huang Jikun,
Rozelle Scott
Publication year - 2008
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2008.00351.x
Subject(s) - food prices , economics , china , computable general equilibrium , agricultural economics , limiting , shock (circulatory) , investment (military) , food security , monetary economics , international economics , agriculture , macroeconomics , mechanical engineering , medicine , ecology , political science , law , biology , politics , engineering
This article addresses how China is being affected by and is responding to the world food crisis. So far, Chinese officials have responded to higher world prices by drawing down stocks and limiting exports of major grains. These policy instruments were not available for soybeans, so domestic prices of soy and other oilseeds have risen with international prices. Using a global CGE model, we show that the initial world price rise was largely due to higher world oil prices and demand for biofuels as opposed to other factors, especially in maize and soybeans. China's response to this shock has kept domestic grain prices low relative to world grain markets and to domestic soybean prices. As grain stocks are depleted, however, demand growth will push domestic prices back into alignment. Anticipating this pressure on consumers and accelerating supply response through public investment will facilitate adjustment.