This paper delves into China’s differential growth in exports with high income and developing countries by focusing on bilateral content of China’s trade and particular exports over the time period 1979-2015. In the last 30 plus years, China has specialized in upstream capital goods and exhibited rapid diversification in consumer goods. Performing causality tests reveals a strong evidence of causality from the export growth of capital goods and consumer non-durable goods to gross domestic product (GDP) per capita. There is also evidence that the causality is bi-directional for consumer durable goods, intermediate goods, and primary non-energy goods with income. Econometric analysis shows a positive and statistical significant relationship between income and export growth of capital goods, consumer non-durable goods, intermediate goods, and primary non-energy goods. Trade openness allows stimulation of growth and efficiency as producers in China are exploiting areas in which they have a comparative advantage.

We investigate sources of output growth and supply response in rice, wheat, corn, and soybeans, the four most important crops in China's grain sector, during 1978-97. Using a growth accounting methodology, we found large total factor productivity (TFP) contributions to growth in grain production immediately following China's rural economic reform (1978-85). In 1995-97, the TFP contribution dropped to only 16 percent of growth in grain production, as greater use of inputs increasingly drove growth. In the supply response analysis, the results of the econometrically estimated restricted profit function confirm a joint and nonseparable multiproduct technology for China's grain sector. Complementarity prevails in the grain sector among different outputs and inputs, meaning that an increase in the price of intermediate inputs/capital or wages would result not only in an absolute reduction in all outputs but also in a change in the composition of these outputs. The expansion (or scale) effects subsided during 1986-97, implying a relatively slow outward shift of the production frontier during this period. If the current government policy environment remains unchanged, China's grain production will become more costly, constraining its future growth and competitiveness in world markets.

China experienced dramatic growth throughout its entire economy during the 1978 to 2008 period. This significant economic expansion may be attributed to China’s open policy after its 1978 overall economic reform. Our inter-temporal analysis of China’s export growth between 1978 and 2008, based on the statistical stochastic decomposition approach, indicates that, in the first ten years after China’s trade openness, most of its export growth occurred in the extensive margin of trade, but later most of China’s export growth appeared in existing varieties or the intensive margin of trade. We find that the distribution of the extensive margin is more dispersed than of the intensive margin, as we use the country-product approach. After applying formal tests, the results show that the intensive margin plays a significant role in the growth of China’s exports.

Using oil price projection from the Energy Information Administration (EIA) and Partial Equilibrium Agricultural Trade Simulation (PEATSim) model, this study focuses on projected impact of oil price changes on global biofuel supplies and market prices. High (low) oil prices increase (decrease) production costs; and producers could shift area away from energy-intensive crops. These factors could change the demand for the production of biofuel feedstocks. The costs of producing corn and soybeans in Brazil and the United States are more sensitive to oil price changes than other crops. Under the high oil price scenario, production of corn, wheat and soybeans, the main feedstocks for EU and U.S. biofuels, will slightly decrease compared to the base. In Brazil, the production of sugarcane, the major feedstocks for ethanol, will expected to increase by more than 3 percent per year compared to the base. Demand for global ethanol and biodiesel are expected to rise as oil prices increase, pushing production up by an average of 9 and 6 percent compared to the base, respectively. However, demand outpaces supply, increasing average prices of ethanol and biodiesel by about 30 percent. The market impacts above are reversed in the case of the low oil price scenario, although not necessarily by the same absolute amounts.

Disclaimer: The views expressed are the authors’ and do not necessarily represent those of the Economic Research Service or the US Department of Agriculture.

Demonstrate the difficulty in developing long-term commodity projections for global markets based on current assumptions about China’s agriculture trade policies and production potential. Analyze two independent issues affecting China’s long-term projections,which affect the global markets and other country projections. Analyze the impact of restricting sorghum imports by China. What are the effects of these restrictions on global market trade, international and domestic prices, producers and consumers? Analyze impact of limiting the continuous expansion in area planted to corn in China and lowering restrictions on corn imports. What will be the effect on global markets, international prices and trade as China increases corn imports for domestic feed demand?

This study assesses the role of energy prices in determining cross-commodity and cross- country projections of production costs, area harvested and production of four major commodities and ethanol and biofuels production. The analysis is conducted using a dynamic global partial equilibrium model of agricultural trade. By simulating changes in energy prices that might result as a consequence of changes in energy policy, we capture the link between the energy market and the agriculture-biofuels sector and present resulting changes in production in major production regions for corn, soybeans, wheat, and rice. Input costs will increase with higher energy prices, but decline slightly with lower energy prices. The projection indicates that higher energy prices will have significant impact on increasing ethanol production in Brazil while decreasing wheat production in the EU. Production in the US and India is relatively unaffected by change in energy prices.

Despite a number of multi-country case studies based on a variety of analytical frameworks and numerous econometric studies using large cross-country data sets that analyse trade openness and its induced economic activities that alters both the volume and value of trade flows, there is still disagreement among economists concerning the nature of this relationship. In this article, we follow a rather unique approach by estimating the density functions of the observed trade flows and the density functions of trade flows generated by tariff removal using an intertemporal global Computable General Equilibrium (CGE) model. Our inquiry is whether or not the trade flows generated by global tariff elimination impact economies in the long-run and alter their historical underlying distributions. If the latter case prevails, it implies that the economies follow a different transitional path into a new steady-state equilibrium. The density functions, estimated parameters and higher moments of the observed trade flow distributions are distinctly different from the parameter estimates of the trade flows generated by the model. In this sense, trade-inducing economic activity as generated by tariff removal and captured by the neoclassical specification of the model is associated with trade flows along a different transitional path from the observed trade flows.

In this study, we estimate total factor productivity (TFP) growth as well as multilateral TFP index for 25 contiguous China provinces over the 19852007 period. Agricultural output growth for each province was decomposed into TFP growth and input growth, where input growth was further disaggregated into contributions from growth of labor, capital, land, and intermediate goods. Over the study period, TFP growth contributed 2.7 percentage points to output growth annually, which was slightly higher than the input growth contribution of 2.4 percentage points per annum. On average, the annual rate of productivity growth peaked during 19962000, at 5.1%. It slowed in 20002005 to a rate of 3.2% per annum and declined in the most recent years (20052007) to 3.7%. Differences in productivity among regions persisted over the entire period. The tendency toward faster TFP growth in relatively well-off coastal regions may imply a widening of regional inequality.

We extend the methods developed by Hausmann and Klinger (2006) to measure and compare the dynamics of a country’s structural transformation and apply the methods to China, Malaysia, and Ghana over the period 1962–2000. The results show that the rate of structural transformation is proportionately higher when a country produces more compact clusters of capital and consumer durable goods which in turn appear to lead more rapidly into new varieties of goods of higher unit values. We find that China’s transformation is the result of increasing proximity of her production/export basket to capital goods and consumer durables and the increasing values of new products in these two clusters. Malaysia’s product space in 1962 contained fewer of the world’s cluster of industrial goods than did China’s. The country nevertheless achieved a more rapid pace of transformation in the late 1980s which reduced her structural gap with China. The structure of the Ghanaian economy, however, is stagnant over time, and the country’s production profile is dominated by primary goods of low value.

This report documents the updated version of the Partial Equilibrium Agricultural Trade Simulation (PEATSim) model developed by USDA’s Economic Research Service. PEATSim is a global model, covering 31 commodities and 27 countries/regions. The model, consistent with economic theory, provides a flexible country and commodity aggregation and accounts for cross-commodity linkages and interactions. The report includes a presentation and discussion of the structure and specific features of the revamped model, along with the theoretical underpinnings. It also documents an application of the model to illustrate its dynamic structure and to demonstrate the differential behavior.

This study analyzes the potential impact of climate change and the uncertainty of CO2 fertilization on China's corn, wheat and rice domestic agricultural markets and the international markets out to the year 2050. The study provides a brief background and reviews research literature of climate change effects on China's crop yields. The paper presents the potential impact of climate change on China's yields and attempts to quantify the domestic and global market impacts. The analysis has four scenarios, which assumes two future levels of greenhouse gas emissions with the effects of CO2 fertilization and no CO2 fertilization. A 27 country commodity partial equilibrium simulation mathematical programming model (PEATSim) is used for this analysis. Results indicate under CO2 fertilization, which increases yields, China's grain imports may decrease leading to a decrease in international prices. Under no CO2 fertilization, yields decrease, China's grain imports may increase leading to increased international prices.

This study analyzes the potential impact of climate change on China's corn, wheat, and rice, domestic agricultural markets, and the international markets out to the year 2050. The study provides a brief background and reviews research literature of climate change effects on China's crop yields. The paper presents the potential impact of climate change on China's yields and attempts to quantify the domestic and global market impacts. The analysis has four scenarios, which assumes two future levels of greenhouse gas emissions with the effects of CO2 fertilization and no CO2 fertilization. A 27-country commodity partial equilibrium simulation mathematical programming model (PEATSim) is used for this analysis. Results indicate under CO2 fertilization, which increases yields, China's grain imports may decrease leading to a decrease in international prices. Under no CO2 fertilization, yields decrease, China's grain imports may increase leading to increased international prices.

PurposeThe purpose of this paper is to quantify the implications of China's recently adopted agricultural policies on domestic and international commodity markets.Design/methodology/approachA systematic, quantitative analysis is applied to address whether China's recent trade and production policies distort China's domestic and international commodity markets. The paper provides a clear picture of how trade‐restricting policies affect markets using a 42‐country partial equilibrium global dynamic agricultural simulation model.FindingsThe paper shows that recent agricultural policy reforms increase China's production slightly, causing imports to decrease while exports decline because of input subsidies, export taxes and the reduction of export value added tax rebates. Domestic prices to consumers decrease in real terms. The effects on world markets are small as the set of policies adopted partially offset each other in the international arena.Research limitations/implicationsThe paper indicates that the adoption of the policy reforms lower price levels domestically and benefit lower income urban and rural households, whose diets are largely based on rice and wheat as staple foods. Future model enhancements should include measures of producer and consumer welfare in order to capture the total impacts of policies and policy changes in China.Originality/valueThe paper quantifies the potential implications of the recent agricultural policy reforms in China. This contributes to the investigation of the effects of these policies implemented by the Chinese Government to achieve the country's policy objectives. Owing to the dynamics of China's policy implementation an in‐depth analysis sheds light and contributes to capturing the impacts of policy reforms on the domestic and international markets.

This chapter examines the impact of expanding biofuels production and use on agricultural commodity markets. It also examines the continued biofuels expansion under declining energy prices. The analysis uses a Partial Equilibrium Agricultural Trade Simulation (PEATSim) model, a dynamic multi-commodity, multi-country global trade model of the agriculture sector to analyze the interaction between biofuel, crop, and livestock sectors. The ability of countries to achieve their energy goals will be affected by future direction of petroleum prices. A 30% decline in petroleum prices (absent of mandates) would result in rapid decline in biofuel use worldwide accompanied by a decline in feedstock and biofuel prices.

Current climate adaptation polices in Brazil are influencing not only the choice of crops but also many agricultural practices at the farm level including changes in planting and sowing periods, use of irrigation-saving technologies, and increased nitrogen fertilization, among others. The shape and content of these adaptation policies and measures for Brazil are not limited to production agriculture, but include also conservation reserve and risk-reducing farm programs. In addition, the decades-old adaptation and management strategies for agricultural production under tropical conditions carried out by EMBRAPA, Brazil’s premier agricultural research agency, continue to play a prominent role. As Brazil is one the world’s largest agricultural producers and exporters of agricultural commodities, impacts in Brazil that may occur under different climate scenarios could have broad implications for food supply and prices worldwide. We find that farmers’ adoption of adaptation strategies could result in significant increases in agricultural productivity, changes in suitable crop growing areas, reduced vulnerability to temperature changes, and improved income generation for farmers.