Foreign Trade, Income And Farmers’ Welfare

The opening-up policy has been one of the basic policies for China since1984.China joined WTO in2001and became the largest country in trade scale around theworld for the first time in2012. In2013,Shanghai Free Trade Zone was established.In order to promote better development of the openness, the initiatives of “Two BeltsOne Road”,at the center of which are Yangtze River Belt,Silk Road Economic Beltand21stCentury Maritime Silk Road,has become the national strategy since2013. Inthe background of openness, the foreign trade of our country grows rapidly.Foreign trade not only changed the supplies of industrial and agriculturalproducts,the equilibrium price, it also changed the hundreds of millions of farmers’welfare through the impacts of consumer surplus and producer surplus. And thefarmers’ welfare will exert influences on the national food security,even the nationalsecurity,and the process of modernization. Subsequently, there is urgent significanceto research the relationship between the foreign trade and the farmers’ welfare. Thispaper takes the income and the relative price of agricultural product into account.Initial, this paper introduces the relative theories of welfare and foreign trade，then describes the conditions of the opening-up of agriculture, the income of farmers,the changes of relative price of agricultural products and the policies of agriculture.Furthermore, the empirical analysis is conducted based on the panel data ofChina in1990-2012. Taking all the factors into consideration, income is one of themost important factors impacting farmers’ welfare. Besides, the relative price of theagricultural product will have important influence on the farmers’ welfare. In order to comprehend their relations, the empirical analysis is conducted in two steps: one isthe impact of foreign trade on the farmers’ income and the other is the impact offoreign trade on the relative price of agricultural products.Ultimate, this paper draws the conclusions based on the analysis above:First, foreign trade is beneficial to increasing the farmers’ income.Second, there is the negative correlation between the foreign trade and therelative price of agricultural products.Third, the positive impact of foreign trade on the farmers’ income is clearer thanthe negative impact on the relative price, so foreign trade is beneficial to theimprovement of farmers’ welfare in the short term. Consequently, we should makebetter use of the domestic and international markets and the resources. But, in thelong term, the impacts on the farmers’ income and on the relative price behaveinverted U-curve characteristics. There are many uncertainties need further study.