Impact Of Trade Liberalization On Sugar Production And Consumption In China At Provincial Level

Trade liberalization will affect sugar industry firmly. It's important to analyze the impact of Free Trade Agreement (FTA) and WTO Doha round negotiation on sugar production, consumption in China. In the same time, the impact simulated at provincial level is ever valuable for sugar industry, because the sugar production located mainly in the poor south-west China.In this thesis, we analyzed the impact of WTO Doha round on China's macroeconomics, welfare level, agricultural product price, and sugar trade through GTAP model. Then, we simulated the possible impact of different FTA. We finally simulated the impact on China's sugar production, consumption at the provincial level, using the results above as shocks.The main findings include:1. The possible impact of WTO Doha round negotiation on sugar tradeFirstly, the impact of Doha round on China's economy is very limited. Because the tariff rate China promised is very low, and China can't get better-off any more.Secondly, the impact on agricultural trade is apparent. The change rate of export will still overtake that of import. Grain and oilseed have increased sharply, which are most protective agricultural products. Oil's import decrease, but its export will increase from 80% to 145%. And the price of grain, cotton and fruit & vegetable will increase, that of oilseed, oil, sugar and meat will decrease.Thirdly, according to the progress of WTO Doha round negotiation, the main reason of being left behind is because disagreement in Market Access (the scenario FD in the thesis). Impact of this scenario is ten to hundred times more than other scenario.Forthly, price is the most important factor to affect Chinese sugar trade. As for China, WTO trade policy is not the most important one, but it's effect on production and consumption will appeared on the international sugar market. And China can get well-off from buy cheaper sugar from overseas. So we regard sugar price change as respond to WTO trade policy.2. The impact of FTA on China's sugar tradeFirstly, China's GDP and welfare level will be better off under each FTA scenarios. The more FTA China signed, the more benefits will bring to China.Secondly, under FTA agreement, the most vulnerable industries include oilseed, vegetable oil, and meat, while the grain sector will be benefited. According to the impact on domestic price, the price in self-sufficient industries tends to increase, while those in less self-sufficient industries will decrease.Thirdly, the different FTAs affect China's sugar industry differently. The FTA with Australia will cause China to import much more, with domestic price decreasing. In the same time, the FTA with European Union or Brazil will cause less increase in import, though domestic price will decrease also. However, FTA with those net-importers of sugar like U.S., Russian, or Japan will stimulate domestic production and cause dramatic increase in export. In the last case, China is hope to become net-exporter in sugar product, and domestic price will increase because of tighter demand-supply relationship caused by more export. In the case China signed FTA with all countries mentioned above, the impact will be similar to the last case, that is, FTA with net-importers in sugar.3. The impact of trade liberalization on China's sugar production at provincial levelFirstly, the impact of WTO Doha negotiation on sugar production is mainly negative. Domestic sugar price will decrease, while the substitution increases, the change rate of the later will be 1.7 times of the former. In the same time, price of inputs like fertilizer will increase simultaneously. Under the pressure of sugar price decrease and inputs price increase, more and more sugar producer will transform to produce other agricultural product.Secondly, the impact of FTA negotiation on sugar production is unclear,it depends on the cooperation framework. The FTA with ASEAN, Australia, Brazil and EU will cause China to decrease 87 million tons. However, FTA with those net-importers of sugar like U.S., Russian, or Japan will cause China to increase 350 million tons.Thirdly, the impacts of trade liberalization on sugar plants and area distribution are differnet. Sugarcane will still be the bigger sugarplants than sugarbeet. Impact of Five important production area's is unclear. The biggest coverage of province is Guangxi and Yunnan, and other areas are less-affected, ranging about 16.6 million tons.Under WTO Doha round, the most-affected province is Guangxi province, will decrease 73.3 million tons. Under FTA cooperation, the most-affected province is not Guangxi, but also Yunnan province. FTA with U.S., Japan will encourage domestic sugar production to add 200.4 and 74.5 million tons separately, though those with ASEAN, Australia, Brazil, and European Union will bring Guangxi and Yunnan decrease 74.6 and 12.5 million tons separately.4. Impact of trade liberalization on China's sugar consumptionFirstly, under the two effects of the economic development and low sugar price, trade liberalization will add sugar consumption from 203.5 to 228.9 million tons. Under WTO Doha negotiation, consumption will add about 112.8 million tons. Under FTA cooperation, consumption has some changes from 90.3 to 122 million tons. In one word, sugar consumption has little elasticity, two trade agreements' effects are little same, domestic consumer will be the biggest welfare receiver.Secondly, different trade policy has different effect on consumption. There are little difference between WTO negotiation's scenarioes, but there are significant difference between FTA's scenarioes.Thirdly, the impact of trade liberalization on area consumption is different. The simulation result is compliable with the classical theory. Trade liberalization in sugar industry will increase domestic consumption. The most-affected provinces include Liaoning, Hebei, Hu'nan, Hubei, Shanghai, and Jiangxi. In summary, the possible innovations in this thesis include:Firstly, the analysis in this thesis focuses on sugar product. We analyzed the possible impact of WTO Doha round and FTA on China's economy, welfare level, agricultural price, and sugar trade through GTAP model.Secondly, we analyzed the impact of trade liberalization integrating those from multi-lateral and bi-lateral agreement. The scenarios in this thesis consider both multi-lateral based WTO Doha round and bi-lateral based FTA.Thirdly, we established the CSMSM model to simulate the impact at provincial level. As before, the analysis at provincial level is rarely observed. The analysis in this thesis extended the basic framework of GTAP to provincial level, to get the possible impact on sugar production and consumption in different provinces. This is the new methodology correlate GTAP model with domestic production and consumption at provincial level.