1、(WTO) at the end of 2001. During those negotiations, China was continually opening upChina Economic Review 15 (2004) 443456* Corresponding author. Tel.: +1 473 3387; fax: +1 202 522 1159.E-mail address: kandersonworldbank.org (K. Anderson).Will Chinas WTO accession worsen farmhousehold incomes?Kym A
2、NDERSONa,*,1, Jikun HUANGb, Elena IANCHOVICHINAcaDevelopment Research Group, World Bank, 1818 H Street Northwest, Washington, DC 20433, USAbCenter for Chinese Agricultural Policy, Chinese Academy of Sciences, ChinacPoverty Reduction and Economic Management, World Bank, USAAbstractMany fear Chinas ac
3、cession to the World Trade Organization (WTO) will impoverish its farmersvia greater import competition in its agricultural markets. We explore that possibility bearing in mindthat, even if producer prices of some (land-intensive) farm products fall, prices of other (labor-intensive) farm and nonfar
4、m products could rise. New estimates, from the global, economy-widenumerical simulation model known as Global Trade Analysis Project (GTAP), of the likely changesin agricultural and other product prices as a result of WTO accession, are drawn on to examineempirically the real income implications of
5、Chinas WTO accession. The results suggest farmnonfarm income inequality may well rise within China but ruralurban income inequality need not.The article concludes with some policy suggestions for alleviating any pockets of farm householdpoverty that may emerge as a result of WTO accession.D 2004 Els
6、evier Inc. All rights reserved.JEL classification: O19; O53; P31Keywords: WTO accession; Chinas economic reform; Income inequality; Farm poverty1. IntroductionAfter 15 arduous years of negotiations, China acceded to the World Trade Organization1043-951X/$ - see frontdoi:10.1016/j.chieco.2004.1On lea
7、ve from University of Adelaide.matter D 2004 Elsevier Inc. All rights reserved.06.007and reforming its economy, and further reforms will be introduced over the next few yearsto fulfill the legal obligations China has committed to in its WTO Protocol of Accession(WTO, 2001). Such reform necessarily i
8、nvolves structural adjustments by households,firms, and bureaucracies, and while the economy as a whole can gain substantially fromthose adjustments, losses and even hardship can result for some households unlesscomplementary domestic policies are in place to facilitate adjustment and/or compensateK
9、. Anderson et al. / China Economic Review 15 (2004) 443456444losers. This underscores the importance of first analyzing the likely distributionalconsequences of the reforms themselves and then considering what complementarypolicies are needed to provide adequate safety nets for potential losers. Of
10、particularconcern in Chinas case is that the reforms may cause farm incomes to fall, exacerbatingthe rise since the mid-1980s in farmnonfarm and inlandcoastal aggregate incomeinequality and possibly reversing the decline since the late 1970s in rural poverty (reportedby Kanbur itincorporates new est
11、imates of nominal rates of agricultural protection as of 2001 and at theend of accession; it takes account of existing duty drawbacks so as not to overstate theextent of reform; it binds the government budget by adding a uniform consumption tax toand one tenth of FOB prices, respectively). That tabl
12、e also shows what China hascommitted to in its WTO Protocol of Accession: tariff rate quota will apply to grains,K. Anderson et al. / China Economic Review 15 (2004) 443456 445sugar, and cotton for which out-of-quota tariffs are quite high, but otherwise, after thephase-in period, the tariffs range
13、between just 1% and 15%representing substantialliberalizations over 2001 levels. As well, producers of major crops may continue to beaffected by commodity-specific policies of government procurement of a portion of thecrop at lower than market prices (as in the pastsee Sicular, 1988) or at higher th
14、anmarket prices (as in 1998see Huang, 1998).3CGE studies such as this one also go beyond detailed farm sector partial equilibrium studies (e.g., Huang,Li, it takes account of differences between farm andnonfarm unskilled labor; and it examines the real income effects on different types of farmhouseh
15、olds that result from the intersectoral movement of unskilled labor.3The articleconcludes by drawing out implications for Chinese policy makers wishing to preempt anydecreases in food security or farm incomes as a consequence of WTO accession.2. The setting: Recent and prospective policies affecting
16、 rural areasAs in most developing countries,4agriculture in China was squeezed at early stages ofindustrialization with gross fiscal contributions to the sector being more than outweighedby implicit taxation in the form of depressed prices for farm products, neglect of publicinfrastructure in rural
17、relative to urban areas, and capital outflows via the financial system(Huang restructuring of the motor vehicles and parts industry following WTO accession ismodeled as a 20% productivity boost to vehicle assembly, following Francois and Spinanger (2004); theliberalization of Chinas services trade a
18、lso follows Francois and Spinanger (2004).8In a subsequent analysis, Sicular and Zhao (2004) provide estimates of 2.67 for the bpushQ elasticity oftransformation from changes in agricultural returns to changes in the supply of labor out of agriculture but only0.6 from changes in nonagricultural retu
19、rns. Ianchovichina and Martin (2004) conduct sensitivity analysis on theimplications of changes in these parameters, and find the results are not altered greatly.9It is often claimed that there is considerable underemployment of unskilled labor on farms in China. Even ifthat is so, our modeling of t
20、hat factor market is not unreasonable in so far as those workers share the proceeds ofother members of their farm family, because then their migration to a new off-farm job would raise the implicitwage for those remaining.4. What do the results show?4.1. The core WTO accession scenarioTo begin with
21、the bottom line of the main scenario before revealing the details, the coreempirical results suggest WTO accession will increase farmnonfarm income inequality.The main reason for this is that the relative producer prices of farm products are projectedby the GTAP model to fall more than the prices of
22、 labor intensive nonfarm productsfollowing the completion of WTO accession reforms (Table 2).The removal of the bvoluntaryQ export restraint on sales of textile products to the UnitedStates and European Union is not the only boost to unskilled labor off farms. There is, inaddition, a lower cost stru
23、cture in unskilled labor intensive manufacturing activities, forthree reasons: the lower demand for labor on farms lowers the cost of unskilled labor inmanufacturing; import taxes on the intermediate inputs used in those manufacturingactivities are lower due to the accession process; and the real ex
24、change rate effect of thetariff reductions lowers the cost of nontraded goods and other factors used as inputs intomanufacturing production. As a result, the quantity of unskilled nonfarm labor demandedTable 2Sectoral volume effects of Chinas WTO accession reforms (core case), 20022007 (% and 1997 U
25、S$ million)Output Employment HouseholdconsumptionExports Imports Tradebalance($ million)ProducerpricesConsumerpricesRice C02.1 C02.3 C00.1 6.1 C07.1 64 C00.9 0.9Wheat C02.0 C02.3 0.0 18.9 C010.1 174 C01.7 0.4Feedgrains C02.3 C02.6 C00.1 C077.8 C02.4 C0596 C01.9 1.9Vegetables and fruits C03.4 C03.7 0
26、.1 14.6 C06.3 214 C01.9 C00.1K. Anderson et al. / China Economic Review 15 (2004) 443456 449Oilseeds C07.9 C08.4 0.9 29.8 20.9 C0789 C02.8 C04.7Sugar C06.5 C07.4 0.6 13.9 24.1 C073 C01.9 C03.1Plant based fibers 15.8 16.4 C00.6 C051.8 7.7 C0189 0.1 3.1Livestock and meat 1.3 1.1 0.0 15.5 C08.9 837 C01
27、.6 0.2Dairy C02.0 C02.4 0.0 13.5 23.8 C0143 C01.5 0.2Other food C05.9 C06.4 0.4 11.4 62.6 C03460 C01.7 C01.8Beverages and tobacco C033.0 C033.1 1.5 9.7 112.4 C014,222 C01.8 C06.9Extractive industries C01.0 C01.3 C00.2 7.5 C04.4 2088 C00.7 1.2Textiles 15.6 15.5 0.7 32.7 38.5 C010,366 C01.7 C03.2Appar
28、el 57.3 56.1 0.5 105.8 30.9 49,690 C00.5 C01.9Light manufacturing 3.7 3.7 0.0 5.9 6.8 1786 C00.9 0.0Petrochemical industry C02.3 C02.3 C00.2 3.1 11.8 C08810 C00.7 0.8Metals C02.1 C02.1 C00.3 3.7 6.8 C01893 C00.4 1.3Autos 1.4 C02.2 1.0 27.7 24.0 516 C03.9 C04.2Electronics 0.6 0.4 0.5 6.7 6.8 453 C01.
29、3 C01.7Other manufactures C02.1 C02.2 C00.2 4.1 18.9 C011,291 C00.5 0.8Trade and transport 0.0 0.0 C00.3 0.8 C00.4 493 C00.2 1.6Construction 0.9 0.9 C00.4 2.7 17.5 C0436 C00.2 1.7Communication C00.5 C00.5 C00.4 C00.5 10.9 C056 0.1 1.9Commercial services C02.0 C02.0 C00.5 C00.4 35.4 C01749 0.2 1.9Oth
30、er services C01.7 C01.8 C00.3 1.4 33.6 C01525 C00.1 1.6Source: Authors GTAP results.Table 3Changein Chinas real factor prices and national economicwelfare due to WTOaccession, 20012007 (%, welfarein 1997 US$ billions)K. Anderson et al. / China Economic Review 15 (2004) 443456450CoreaccessioncaseAlte
31、rnative 1:greater agriculturalprotection cutsAlternative 2:core case plus alsoremoving negativeagricultural protectionFarm unskilled wages C00.7 C00.9 C00.5Rental price of land C05.5 C06.4 C04.7Nonfarm unskilled wages 1.2 1.4 1.1Skilled labor wages 0.8 1.0 1.5Rental price of capital 1.3 1.5 1.5Farm
32、household incomeaType A C01.6 C01.9 C01.3Type B C00.8 C00.9 C00.6Type C 0.1 0.1 0.1National economic welfare($ billion increase)9.56 9.57 9.87Source: calculated from the authors GTAP results.aFarm income from agriculture is made up of 57% from unskilled labor, 26% from land, and 17% fromcapital, acc
33、ording to the GTAP database. In 1999, on average, 51% of rural household income in China wasearned outside agriculture, mostly from unskilled labor; and according to DeBrauw, Huang, Rozelle, Zhang, andZhang (2002), around 45% of rural laborers had a job off the farm. Therefore, to illustrate the imp
34、ortance of thoseoff-farm earnings, three types of farm households are shown in this table: it is assumed nonfarm unskilled laboris greater (by 0.8%). However, lower farm product prices mean the quantity of unskilledfarm labor demanded is less (by 1.7%), resulting in a 0.7% fall in the real wage foru
35、nskilled farm labor and a rise in real wages for unskilled nonfarm labor of 1.2% (afteradjusting for the change in the aggregate cost of living). Farmers are also made worse offby the lower demand for farm land, the return from which is 5.5% lower in 2007 followingWTO accession reforms. Meanwhile, t
36、he real wages of skilled labor increase by 0.8%, andthe rewards to nonfarm capital are 1.3% higher.Together, these results suggest that the owners of nonfarm capital gain almost the samein proportional terms as unskilled laborers in nonfarm employment, but the latter do betterthan skilled workers. H
37、ence, on balance, income inequality may improve slightly amongnonfarm households dependent mainly on labor income.10However, income distribution can be expected to slightly worsen as between farm andnonfarm households, although the degree depends on the proportion of farm householdincome earned off
38、the farm. With only 1.7% of (or about 6 million) unskilled farm workersleaving agriculture for nonfarm work, and with land returns depressed by 5.5% in additionto farm labor returns being 0.7% lower, the gap between farm and nonfarm incomes evenwithin rural areas, and certainly between rural and urb
39、an areas, looks set to rise slightlyunless remedial policy action is forthcoming. For farm households entirely dependent oncontributes 0% of farm household income for Type A, 30% for Type B, and 60% for Type C. We assume allhouseholds have the same expenditure pattern and so all changes are net of t
40、he CPI change.10Wages of skilled workers might increase more than suggested here, as we do not capture the endogenousproductivity growth resulting from the substantial liberalization of the service sectors. For a recent study that doesincorporate that effect using a dynamic version of the GTAP model
41、, see Ianchovichina and Walmsley (2003).K. Anderson et al. / China Economic Review 15 (2004) 443456 451earnings from agriculture (Type A in Table 3), income would fall 1.6% on average. Thiswould differ little across the country since product shares for farm outputwhen fishproducts are ignoredare rea
42、sonably similar in western, central, and eastern provinces;however, if we look at northern and southern provinces in China, differences could belarger since wheat, maize, soybean, and cotton are planted primarily in northern Chinawhile rice, horticulture, livestock, and fish are raised mainly in sou
43、thern China. For farmhouseholds earning 30% of their income from nonfarm unskilled work, however, thatincome fall is only half as large (0.8%); and for farm households earning 60% of theirincome from nonfarm unskilled work, their incomes would not decline at all (Types B andCinTable 3see rows 7 and
44、8).Sectoral details of the GTAP results are summarized in Table 2. Real consumer prices(relative to the CPI) are lowered most by WTO accession for motor vehicles, oilseeds, andsugar (and for beverages and tobacco, although if China was using import taxes on thoseitems as a form of consumption tax an
45、d their decline were to be matched by an increase indomestic sales taxation, those price declines may not materialize). They are also loweredfor textile products and to a lesser extent clothing. Among the farm products, consumerprices are raised slightly for livestock products, somewhat more for gra
46、ins, andsignificantly for cotton (plant-based fibers).Producer prices (also shown relative to the CPI) fall more than consumer prices becauseof a uniform consumption tax of 1.9% that is levied to compensate for the loss of importtariff revenue. However, they are down more for farm products than for
47、most otherproducts except autos. In addition, farm output is down for all but cotton and meat.Moreover, feedgrain exports shrink by three quarters and cotton exports by half with theabolition of export subsidies. The difference in the effects on production and consumptionshown in Table 2 reveals tha
48、t Chinas food, feed, and fiber self-sufficiency will be reducedat least slightly by these reforms. But the extent is really quite minor: the trade balancecolumn in Table 2 suggests that for all agricultural and food products, net imports wouldbe greater because of the remaining accession reforms by
49、only $3.96 billion per year by2007 (in 1997 US dollars), which represents only 1% of total imports.The above results depend as always on the assumptions in the model. To check thesensitivity of some of those assumptions, two alternative scenarios were run to comparetheir results with those in the base accession scenario: one with greater agriculturalprotection cuts and the other removing negative agricultural protection.4.2. Alternative scenario 1: greater agricultural protection cutsWhat if the grain, sugar, and cotton NRPs were to drop tothe in-quota tariffleve
