Study On Grain Trade Of China And Its Large County Effect

China is one of the largest countries both in grain production and consumption. Moreover China plays an important role in the world grain market, considering its large quantities of export and import. Under the background that grain problems have been concerned all over the world, this paper focuses on the evidence searching for China's Large Country Effect in order to attest its role in the world grain trade. There are six parts in this paper. Part 1 is preface and Part 2 is the research frame and key concepts. Part 3, Part 4 and Part 5 consist of the main body of the paper. In Part 3 and Part 4, the paper analyses China's grain trade development as well as trade policy, based on which, this paper validates China's Large Country Effect in the world grain market in Part 5. The last one Part 6 is the conclusions.The paper gives a comprehensive presentation on historical(from 1949)and recent development of China's grain trade, summarizes characteristics among varied periods, China's market share and main players of China respectively in wheat, maize, rice and soybean import and export market, in addition, analyses the effects on grain trade of China caused by domestic policy. The paper is proposed to China's grain will be more open since its entry to WTO, however the domestic policy will still have strong impact on the grain trade. Based on that, this paper investigates the behavior of wheat prices, maize prices, rice prices and soybean prices both in domestic market and abroad using the cointegration and Granger causality test methodology. It comes out to be that there is long-run cointegration for wheat, maize, rice soybean in domestic and world market. And the following results are proved, from the Granger causality test for maize and rice, domestic price changes before the price in world market changes. For wheat, world price changes earlier and the domestic price changes later. For soybean, the domestic price changes first before China's entry to WTO and totally opposite after China's entry to WTO. When applying the academic findings to China's experience in grain international trade, we find that in maize export market and rice export market, the Large Country Effect is obvious, while in the wheat import market there is few obvious evidences for the effect. There is nearly no Large Country Effect on soybean import, though China is the biggest importer in the world soybean market.