Regional Economic Consequences of the Chinese Agricultural Support Policies

The Chinese government has implemented comprehensive domestic agricultural support policies to stimulate agricultural production for almost one decade. However, there is surprisingly little literature on its economic impact, particularly at the regional level. Using a multi-regional comparative static computable general equilibrium model, we estimate the spatial economic consequences of these policies for all 31 provinces/municipalities under the agricultural resource constraints in China. Our results show that, under the pressure of its scarce and progressively degrading natural resource base, the agricultural support policies ultimately push up production costs in all sectors and erode the international competitiveness of export-oriented industries.