China’s Agricultural Trade In World Trade Blocs And Emerging Markets

Trading blocs and emerging markets have been dramatically expanding throughout theworld economy. The EU has become the largest and most powerful trading bloc in the world. Theemerging markets such as Brazil, Russia, India, China, and South Africa (BRICS) are among thelargest countries in the world and play an increasingly vital role in the global economy.Agricultural trade plays an important role in economy of EU and BRICS member countries.China is interested in expanding its agricultural trade relations with the EU as the largesttrade bloc and other BRICS countries (Brazil, Russia, India and South Africa) as the largestemerging markets in the world. China’s agricultural trade with EU and other BRICS countries isincreasing and has lead to China’s proposal to expand this relation.Given this background, one of the main aims of this thesis is to evaluate China’s bilateralagricultural trade relations with EU-27and other BRICS member countries. Before evaluation ofthis relation, an overview of China’s role in world agriculture is indicated. Moreover, the factorsaffecting agricultural trade flows between China and major trading partners are determinedthrough adopting gravity model approach.The thesis examines China’s agricultural trade performances with the EU-27and otherBRICS countries by analyzing the trade intensity index, the trade complementarity index and therevealed comparative advantage (RCA) index. These analyses reveal the situation of China’sagricultural trade with the world in general and with EU and other BRICS countries in particular.Based on the findings, it can be said that China’s agricultural export patterns followed thebasic gravity model, implying that bilateral trade flows will increase in proportion to the size ofthe economy (product of GDPs) and decrease in proportion to the distance involved. China’sagricultural exports tend to increase into countries where the official language is Chinese, which suggests that sharing the same language promotes exports. Both of population, common borderand trade agreements are not significant factors in explaining China’s agricultural exports. On theother hand, China’s agricultural import patterns had not followed the basic gravity model, wherethe distance variable didn’t show its expected sign. The findings also reveal that, China-EU27agricultural trade has increased dramatically in recent years. EU is now the China’s2nd tradingpartner behind Japan and one of the sources of imports. China’s demand for increased agriculturalimports presents enormous opportunities for European agricultural exports to this growingmarket. This indicates the importance of China and EU in each other’s markets. The findings alsoindicate that, despite China’s efforts to increase further its volume of agricultural trade with theother BRICS countries, their trade relation has well below expectations. Nevertheless, anincreasing trend shows promising future prospects for agricultural trade between these countries.