Regional Specialization of China's Agricultural Production

ing the emergence of China as a trading nation. Most observers agree that China's commodity composition of trade changed along with domestic market reform, and that trade patterns (especially on the export side) are now more consistent with China's comparative advantage, compared with the pre-reform and early reform time periods (Lardy, Naughton). China shifted away from petroleum exports and increased exports of labor-intensive manufactured goods, to the point where manufactured goods accounted for 90% of exports in 1999. The share of primary commodities in total imports fell from a little over one-third in 1980 to about 10% by 1999. As a measure of openness, the nominal value of China's total merchandise exports and imports grew at annual rates of about 13% over the 1980-99 time period. Despite these changes, the degree of China's openness to foreign trade is debatable, as is the degree of domestic regional economic integration. For instance, the ratio of foreign trade (exports plus imports) to GDP fell slightly from 8.4 to 8.0%, from 1980 to 1999, valued at purchasing-power parity (World Bank). Bach, Martin, and Stevens estimated that China will reap substantial welfare gains from further trade liberalization, suggesting that more trade reform is required to fully capture gains from specialization according to comparative advantage. It is not only external trade barriers that remain important. China's interprovincial barriers are believed to be high due to explicit and implicit domestic policies. Some researchers found evidence that barriers to inter-regional trade have actually risen since economic reform (Young). Young argues that rent-seeking by local officials created new and costly distortions, even as economic reform proceeded. He determined that the creation of new distortions in China has moved agriculture toward regional autarky-shifting regional agricultural production away from patterns of comparative advantage. China's international trade growth in agricultural products is even slower than for manufactures, and the implications for regional specialization in agriculture could be significant. Compared with merchandise trade, the nominal value of agricultural exports and imports grew considerably slower from 1980 to 1999, at average annual rates of 6.6 and 5.0%, respectively. Growth in the real value of agricultural trade averaged only 2% annually, from 1980 to 1999-less than half the growth rate of the real value of agricultural output. Clearly, the liberalization of agricultural trade has proceeded much slower than manufacturing in China. Significant tariff and non-tariff barriers remain on food and beverages (U.S. Trade Representative). These observations prompt an interest in whether agricultural production is becoming more regionally specialized in China to better capture its comparative advantage. This paper examines the extent of regional specialization in agriculture in China and identifies trends in specialization from 1981 to This paper was presented at the ASSA winter meetings (Atlanta, GA, January 2002). Papers in these sessions are not subjected to the journal's standard refereeing process. Colin A. Carter is a professor of agricultural and resource economics and a member of the Giannini Foundation of Agricultural Economics, University of California, Davis; Bryan Lohmar is an economist with the Economic Research Service, U.S. Department of Agriculture.