MOTIVATION
China is a leading example of the opportunities global trade liberalization can offer developing countries and emerging economies. China has been a World Trade Organization (WTO) member since 2001, and while freeing up global trade has benefited the overall economy, certain groups of Chinese citizens—specifically those in low-income rural areas—have not enjoyed many of those benefits. Open trade leads to increased competition inside and outside the country. Without policy changes, small producers in western China were not able to compete and were more vulnerable to food insecurity. IFPRI worked with Chinese policymakers to provide the information needed to craft the most effective policies for helping smallholders access the benefits of becoming a WTO member. Given the size of the Chinese economy and population, such policies would make a real difference in many lives.
OUTCOMES
Research results from the Rural Poor and Smallholders in Western China under WTO program (2003–2006) showed that full trade liberalization—lifting trade barriers in both agriculture and nonagriculture sectors—would benefit farmers and agriculture at the national level, but policies were needed to extend those benefits to the western region, where 70 percent of China’s poor people live. Liberalizing the agriculture sector alone would increase cheap imports of agricultural products, particularly grains, decreasing domestic agricultural production and farmers’ agricultural income. Even with full trade liberalization, the increase in rural income would be smaller than the increase in urban income, which implies that the rural-urban income gap would widen. Using these results, the program developed a series of policy-option papers in Chinese to advise policymakers. According to an IFPRI commissioned external impact assessment, the Chinese government shifted regional resource allocations to China’s poorer western regions, which is consistent with IFPRI recommendations.
