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INTERNATIONAL CENTER FOR AGRICULTURAL AND

RURAL DEVELOPMENT (ICARD)

(CAAS-IFPRI)

ICARD Research Projects

         I.            Rural Poor and Smallholders in Western China Under WTO

Although China's overall economy will certainly gain from the country's entry into the WTO, these gains will not be equally distributed among sectors and across regions. The agricultural sector will be challenged by competition from cheap imports. Smallholders, particularly in the northwest and southwest, will gain very little or may even lose, since farmers in these areas are still predominantly engaged in grain production, in which China has no comparative advantage. These producers will suffer the most if appropriate policies are not implemented to help them adapt.

The objectives of this proposed study are to analyze the impact of WTO entry on smallholders in livestock-predominant rural western areas in China, and to offer policy options, particularly public investment policies, that will lead to faster economic growth and poverty reduction and buffer against shocks resulting from WTO membership.

The study will use a multilevel analysis at the household, community (township and village), and regional/national levels. The household-level analysis will focus on the determination of rural household income, nonfarm employment, and rural wages, using a household model. The village/township-level analysis will evaluate how local government policies and institutions affect farmers' welfare and the efficiency and effectiveness of public provisions. The regional/national-level analysis will quantify the effects of China's macroeconomic and trade policies, such as the impact of WTO accession, on different regions, particularly the less-developed western rural regions, and on farmers' welfare. The study will use a series of multilevel simulations (that is, interactions among the macroeconomy, sectors, regions, communities, and households). The multilevel modeling system will then be used to evaluate alternative policy interventions to help the western regions adapt to WTO accession.

        II.            China's Support to Agriculture Under WTO

It is difficult to measure the exact degree of China's support to agriculture, considering its complex pricing and financial system. However, the general trend is that China is in transition from taxing to subsidizing its agriculture. The proposed study will help develop support measures that are consistent with both Chinese pricing and financing systems and WTO standards.

      III.            Agricultural Growth and the Environment

The Green Revolution that began in many developing Asian countries in the late 1960s and 1970s has led to rapid growth in agricultural production and to large reductions in poverty. However, intensive use of fertilizers, pesticides, water, and other industrial inputs typical of the Green Revolution has also led to degradation of natural resources and the environment, including underground water depletion, soil salinity, and wind and water erosion. Environmental degradation in turn has led to a slowdown or even decline in agricultural growth, in addition to its negative impact on human health and the ecosystem.

The key hypothesis of the proposed study is that intensive use of inputs may increase agricultural production rapidly in the short run, but that it may cause the growth rate to decline or even stagnate over time-and that agricultural growth and sound natural resource management need not be at odds.

Using regional dataving forward from sectoral reform, which has stimulated macroeconomic reforms; India has taken a broader approach to macroeconomic reform, fine-tuning sectoral reform later. In both countries, reforms have led to rapid economic growth, expanded international trade, and a large reduction in rural poverty. The objectives of the IFPRI project are

                                 ·            to review, analyze, and compare the impact of economic reforms on Chinese and Indian agriculture;

                                 ·            to explore the lessons learned from the experiences of these two mega economies for faster growth and poverty alleviation;

                                 ·            to generate dialogue and discussions through two workshops each in China and India;

                                 ·            to strengthen the capacity of in-country researchers for policy research and communication; and

                                 ·            to develop a network of policy researchers, advisers, and decisionmakers in China and India.

Address: 12 Zhongguancun South Street, Beijing 100081, P.R. China

Phone: 62120915 ,62120916, 62120917     Fax: 62120915    E-mail: s.fan@cgiar.org