Objectives
The CATSEI-project (acronym for Chinese Agricultural Transition: Trade, Social and Environmental Impacts) is a STREP project within the Sixth Framework Program of the European Commission, executed during the period January 2007 through November 2010, with fifty percent cofunding by the participating institutions. It studies the impacts of China’s vigorous agricultural transition, on the country itself, as well on its trading partners, the EU in particular. It follows a quantitative approach, supplemented by qualitative investigations. The quantitative research takes as point of departure the Chinagro I policy simulation model developed in the earlier CHINAGRO project funded under the Fifth Framework Program, also with fifty percent cofunding by the participating institutions.
Regarding methodological improvement, the research on trade extends the Chinagro I model by accounting for the size of China’s imports and exports through an explicit representation of the world market, based on the GTAP-model of world trade. The research on social conditions links geo-referenced household surveys to a population map of China and a detailed geographical data set, so as to obtain a complete picture of social household characteristics across the country. Finally, agro-ecological assessment tools are applied to quantify the environmental pressures resulting from intensified livestock industry as well as from intensified crop production.
Findings on the three themes are subsequently integrated to arrive at policy suggestions that account for efficiency, equity and sustainability considerations. Throughout the project, a policy dialogue and dissemination program, conducted in both China and the EU, maintains communication with policy makers.
| This makes it more difficult to define the policy package that will be most effective in enhancing the benefits of growth while curtailing the negative consequences. Rising wealth, falling fertility rates, migration, industrialization, increasing openness in domestic and international markets and changing preferences of China’s urban and rural consumers all will have wrenching effects on the supply, demand and trade of the agricultural economy of China and will affect who benefits and who gets hurt and how the environment will be affected. In part a cause of these changes and in part a response to them, the government’s policy also is changing fast. In the same way that government’s efforts to support agricultural R&D, land tenure, water management, market reform and rural to urban migration in the past have had large impacts on the agricultural sector, it is expected that newly adopted policies in these areas will have similarly significant impacts in the future. In fact, it is arguable that the current government’s commitment to building up the rural economy is a new watershed in the magnitude, comprehensiveness and direction of support. Fiscal reform, enormous investments into rural infrastructure, emerging subsidy programs, new education and health initiatives - all coming under the new umbrella of China’s “New Rural Development Program” - need to be considered in any effort to understand where the agricultural sector is heading, how rural residents inside China will be affected, how the environment will fare and what will be the impact on the rest of world. We use a scenario approach to analyze these changes, meaning that we opt for quantification and seek to understand how the forces will change over time and capture their impact on the economy. In other words, our main task is to describe both the forces and their impacts. |
| Indeed, geographical distance itself significantly affects the agricultural prospects of many of its regions due to their varying transport cost to and from urban centers and seaports and world markets. Farm incomes tend to become lower in inland areas as one moves away from the coast and the fertile river plains. Social conditions in the villages reflect this and the largely urban and Eastern-based economic growth creates rising income disparities that are only to a limited extent compensated by rural to urban migration (especially because rural population growth is higher). Regarding the environmental conditions of rural China, intensities of feed and fertilizer use exhibit a similar pattern, leading to nutrient surpluses close to the cities and deficits on the steppes in the Northwest, while water shortages and associated environmental problems rise as one moves northward. Hence, a geographically explicit approach - especially one that takes China’s transportation infrastructure and its recent changes seriously - is required. Here also quantification is necessary, as a qualitative approach is unlikely to capture completely the diversity across China. |
| Because of the thinness of many agricultural commodity markets in the world, small shifts in the imbalance between supply and demand for China can often have major implications for the rest the world. The EU may in particular be interested in finding out how the dynamics inside China will affect the balance of agricultural trade. Is it possible that China could become a major exporter of labor-intensive horticultural products to the EU, while the EU could begin to export livestock products and possibly feed grains to China to help it satisfy its fast-rising demand for meat. Theory suggests that these types of trade shifts would improve overall welfare in both countries, but it also axiomatically means that there will be winners and losers in both sets of nations and that in some cases vulnerable groups in China, the EU and elsewhere will be hurt. Because of this, it is important to understand how changes in trade policies - both multilateral (e.g., the WTO initiatives) and bilateral (direct negotiations between China and the EU) - will affect the flow of commodities between China and the EU and between China and the rest of the world. Trade policy changes will also amplify or attenuate domestic policy changes and shifts in economic forces that affect the supply, demand and trade of agricultural commodities and opportunities to work off the farm. Therefore, the impact of changes in China on the rest of the world, as well as changes in policy regimes elsewhere, in WTO regulations and in bilateral agreements have to be analyzed as well. |