The Effects Of Soybean Trade Policies On Domestic Soybean Market In China During The Food Crisis

During the worldwide food crisis, many food production countries used the grain export restrictions or import incentive policies to safeguard the country’s food supply in the short term. China was also trying to use the trade policies to regulate food supply. As for soybean, China lowered the yellow soybean import tariffs from 3% to 1% temporarily, and canceled the soybean export tax and levied provisional export tariffs of 5%. However, some questions were not clearly answered. For example, what’s the impact of these policies on domestic soybean market, and whether the trade policies stabilized the domestic soybean market or not.This paper uses a Markov switching error correction model (MS-ECM) to analyze the effects of soybean trade policies on domestic soybean market in China during the food crisis, through the analysis of market integration, market equilibrium and market stability. In order to avoid external markets disturbing the research conclusions, we select America that no controlling of soybean trade during the food crisis as a reference. The empirical analysis finds that:China’s soybean temporary trade policies have led to a decrease of the integration between domestic and international soybean market, and policy implementation also hasn’t stop the falling of domestic soybean market’s stability. Therefore, in order to safeguard the stability of China’s domestic food market under the international background, China should constraint the implementation of the soybean import encouragements and export restrictions.