The Effect Of Institutional Factors On Chinese Agricultural Trade

With the degree of trade liberalization improves gradually, the economic andtrade exchanges has increasingly become more and more close between variouscountries and regions. Under the complex environment of international agriculturaltrade, the trade of Chinese agricultural products was impacted by a different degree.There are many factors that restrict the development of foreign trade ofagricultural products in China. The most important are institutional factors. It is a keyfactor restricting economic development, and also plays an increasingly importantrole in a country’s foreign trade. It is significant to analyze the main factors that affectChina’s agricultural products exports and imports to deal with the challenges in worldagricultural trade war.In this paper, we firstly introduced the present situation of China’s agriculturaltrade from the three aspects such as scale status, product structure and marketstructure. China is not only an agricultural production power, but also a consumptionpower.The agricultural products import and export have been increased greatly in recentyears and the case is especially true with the agricultural products import. In2004atrade deficit emerged. From then on agricultural product trade has been in deficitcondition and the deficit has been widening. At the same time, China’s agriculturalexports to the world’s agricultural exports have been of low level. It implies that theinternational competitiveness of Chinese agricultural products is relatively weak onthe whole.Secondly, in this paper, we added some institutional factors to set up theexpansion of the gravitational model of trade. These indicators included fiveinstitutional variables such as legal system, monetary policy, trade policy, investmentpolicy and market standardization degree. We select China’s export and import tradeof agricultural products from2002to2008as research subjects and empiricallyanalyzed the main affecting factors of China’s agricultural products trade.Conclusion showed that: the five institutional factors were of great importanceon the import and export trade of Chinese agricultural products. Perfect legal systemand effective monetary policy will promote the import and export of agriculturalproducts. Trade barriers and black market will impede the trade of China’s agricultural products. The more foreign capital government introduces the morebeneficial to the development of the trade of agricultural products in China. Amongthe five system factors, the most important is trade policy and then is the marketstandardization degree factors.At last, according to conclusion of this paper, this paper attempted to put forwardseveral policy recommendations on how to improve the institutional factors, reduceagricultural trade deficit and promote China’s agricultural trade.