[China Agricultural Machinery Industry News] The United States recently filed a lawsuit against the World Trade Organization (WTO), accusing China of providing illegal subsidies to domestic rice, wheat and corn growers. The US Trade Representative Office issued a statement saying that China’s “market price support†for rice, wheat and corn is much higher than China’s commitment to join the WTO. The US believes that this price support policy "human incentives" for Chinese farmers to increase production and reduce the export of US agricultural products to China.
Is there still too much to do with hard Chinese food?
China's accession to the WTO has gone through 15 years of hard work, naturally respecting WTO rules, and insisting on supporting China's agricultural production and development and maintaining the international trade system of agricultural products in a manner consistent with the rules.
As a "three good students" in the international trade class, students who like to act as "trade police" are inevitably stared. However, in this case, we must talk about it! How can Chinese agriculture subsidize too much and affect international trade?
Why stare at rice, wheat and corn?
The United States said that because the subsidies seem too much and "unreasonable", resulting in an increase in China's grain output, its direct consequences ... naturally affect the United States.
Let's look at a set of data – the United States is a global agricultural exporter, and its exports to China last year exceeded $20 billion. According to the VOA website, as China's agricultural output continues to increase, US exports of agricultural products to China are decreasing, while rice, wheat and corn cultivation in the United States involves 200,000 jobs.
This shows that China has more rice, wheat and corn, which hinders the export of the same agricultural products in the United States and harms the interests of American farmers.
However, rice, wheat, and corn, as the three main staples, are not linked to the interests of Chinese farmers and China's "food security"?
For the US lawsuit, the head of the Department of Treaty and Law of the Ministry of Commerce of China pointed out that agriculture is a country's basic industry, which is related to the economic interests of many agricultural producers. The government provides support to domestic agriculture, mobilizes the enthusiasm of agricultural producers, and improves the agricultural production capacity of the country. It is an international practice and is also permitted by WTO rules.
China's grain output has experienced continuous growth for more than a decade. However, China is a big country with a population of more than 1.3 billion. It is not a panic in the hands of holding its own food. Without a stable food production capacity, there can be no real food security.
At the same time, the reduction of cultivated land, water shortage, and climate change are increasingly restricting food production. With the development of urbanization, industrialization and population growth, food demand has grown rigidly, and food supply has been in a “tight balance†for a long time.
Therefore, among the three staple foods, China’s food ideas are focused on rations and grains, especially rations. The rations include wheat and rice, which are not ambiguous at all. As for corn, China’s structural adjustments to corn cultivation have started.
It can be seen that no matter how it develops, China's emphasis on food security and support for farmers will not be relaxed.
Is there too much agricultural subsidies in China?
The US litigation China cited the promise of China's accession to the WTO, which is the "yellow line" problem of China's grain subsidies. At that time, China had stated that the “yellow box subsidy†that had a large distortion of trade, such as price support and direct subsidies linked to the current production of agricultural products, should not exceed 8.5% of the output value. According to statistics, China's “three rural†financial subsidies have approached the “yellow line†of 8.5%.
In 2015, China's grain direct subsidy reached 16 billion yuan, and the total amount of funds invested in agriculture was about 1.6 trillion. Is this more or less? Let's compare it with other countries.
The data shows that the average level of agricultural subsidies in OECD countries is 21.7%, much higher than China's 9.1%. Compared with the subsidy level of 52.1% in Korea and 47.3% in Japan, China is farther apart.
The United States has always implemented a high financial subsidy policy for agriculture. The agricultural subsidy policy relies mainly on law rather than administrative means. The main basis is the agricultural bill, which emphasizes the need to provide farmers with a safety net for income. This is not only to support food production, but also to provide farmers with an income support. 40% of American farmers' income comes from agricultural subsidies.
This shows that China's subsidies for agricultural products such as grain need to be further improved. Of course, the way subsidies need reform.
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