Comparative Advantage And Structure Adjustment In China's Crop Production

With 9.6 million km2 of total land area, China is a big country and exhibits significant regional differences in climate, topography, soil and so on. Partly due to such differences in natural resource endowments and partly due to differences in the level of economic development, various cropping systems and production techniques have been developed in the grain sector across China during her long history. Those differences constitute the bases of regional comparative advantages in grain production, as well as in other sectors.China's long history of centrally planned control over grain production, improper government intervention, and underdeveloped marketing infrastructure are responsible for China's inability to fully realize regional comparative advantage in grain production. The potential for improving resource allocation efficiency based on regional comparative advantage is significant.This dissertation is a pioneer research to model the structure adjustment of China' s main crop production based on potential regional comparative advantage with direct production indicators. Firstly, our research measures the potential comparative advantage in crop production using Ratio of Regional Domestic Cost (RDRCC). Then contemplating constrains of resource limitation, political considerations, macro economical situations, our research use dynamic programming to model the he structure adjustment of China' s main crop production. Aiming at maximizing farmers' income, analyzing situation of crop production, trading at home and abroad and regional comparative advantage, we get direction and range of structure adjustment in China's crop production. Finally we try to raise suggestions on policy reform to facilitate structure adjustment.The dissertation using sown area as decision variable, model different conditions as following:1. International price doesn' t change,2. International price increases 10 percent,3. International price decreases 10 percent, and4. International price of labor-intensive products increases 10 percent; International price of land intensive products decreases 10 percent.The main result of the modeling is showing as follows:1. Farmers' net income of crop production increases from 5.6% to 7. 55% after adjustment,2. The production cost of grain and oil crops decrease 10%, cost of cotton and sugar crop decrease from 5 percent to 10 percent,3. The sown area of grain decreases 1.15% while sown area of cash crops increase 3. 38% and total grain production decreases 3. 6%.The results reveals that although the production of land intensive products such as grain lacks comparative advantage, labor-intensive products such as cash crops shows strong comparative advantage. On the other hand, some agricultural products don' t have comparative advantage in national level, but in some region they show strong comparative advantage. Even though all products in one region haven' t any absolute advantage, they can gain by focusing on products with comparative advantage and trading with others. The difference between crops and regions provides good opportunities for China to carry out structure adjustment and trading, and to gain more benefits. Furthermore, structure adjustment according to comparative advantage can improve resource allocation efficiency, increase farmers' income and decrease production cost in national level.This dissertation will help to the establishment of policy to strength food security, facilitating structure adjustment, enhancing resource usage efficiency according to comparative advantage. The result will help central and local government to understand how to and in what extent can they improve resource allocation efficiency using indirect policy. The result also will help farmers to find their production potential, and how to carry our structure adjustment to maximize their income whenever market permits. After China' s acceding to the WTO, Chinais facing new challenge to open domestic market. Our research will help to understand in which way can comparative adva...