Corn trade simulations of China: reduction in tariffs versus expansion in tariff-rate quotas
ISSN: 0144-3585
Article publication date: 2 November 2021
Issue publication date: 20 September 2022
Abstract
Purpose
Corn, which has the highest domestic production, planting area and consumption, is the top cereal in relation to demand and supply in China. However, the comparative advantage of China in corn has continuously deteriorated in recent years and based on the recent situation and possible supply and demand trends, it is widely accepted that a corn self-sufficiency rate of 95% is difficult to achieve. Under current import-restriction policies, corn may stand at the crossroads of reforms to solve its predicted insufficient supply. In this study, the authors analyse the necessity of relaxing trade restrictions on corn in China and explore the effects of trade restrictions by reducing tariffs and expanding tariff-rate quotas on corn and related industries and the welfare change caused by possible relaxations.
Design/methodology/approach
The authors construct a computable general equilibrium (CGE) model and design nine scenarios for the analysis.
Findings
The results show that relaxations of import restrictions are probable methods to meet the aim of sufficient corn supply during shortages. They are simulated to reduce corn's domestic production and price, increase import and import prices and lead to a decline in self-sufficiency but benefit the production of corn-related industries of corn. The results also imply that expanding the quota is a better method for releasing trade restrictions in China.
Originality/value
The comparative advantage of China in corn deteriorated with an increase in prices. Based on the current situation and possible trends of supply and demand, the referenced goal of achieving 95% corn self-sufficiency appears difficult, implying that reliance on imports is probably imminent and vital. This study provides simulation results in future scenarios and offers policy implications for China's corn trade policies.
Keywords
Acknowledgements
The authors would like to thank the anonymous reviewers for their valuable suggestions and comments on the earlier draft of the paper.
Funding acknowledgement statement: Financial support in part by the scholarship from China Scholarship Council (CSC) under the grant code – CSC201806350228 is deeply acknowledged.
Citation
Liu, K., Yamazaki, M., Koike, A. and Mu, Y. (2022), "Corn trade simulations of China: reduction in tariffs versus expansion in tariff-rate quotas", Journal of Economic Studies, Vol. 49 No. 7, pp. 1284-1303. https://doi.org/10.1108/JES-08-2021-0380
Publisher
:Emerald Publishing Limited
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