Study On The Potential Of Chinese Import Of Agricultural Products From Brazil

As China’s economic development and people’s living standards improve, China’s demand for grain is growing and as reduction in arable land, China’s grain self-sufficiency rate is declining. Faced with domestic grain production can’t meet the country’s growing demand, it is increasingly important for china to participate in international division of labor actively and make full use of the international grain market. In terms of China’s grain imports, import concentration of five main agricultural products (rice, wheat, corn, soybeans and cotton) are high, and import source countries are single. Especially corn and soybean, as their imports from the United States accounted for 98.2 percent and 44.5% of China’s total imports respectively, their dependences on the United States are relatively high. Facing a higher risk of U.S. agricultural embargo and sanctions on China, it is particularly important to look for a good third party actively which’s political and trade relations are good with China and exports potential of agricultural is huge.Based on the analysis of Revealed comparative advantage and Trade complementarity of the major agricultural products in Brazil, Brazil’s corn, soybean and cotton’s Revealed comparative advantage indices are 6.3,16.58 and 5.77 respectively, which are greater than 2.5 and showing strong comparative advantage. Combined with the absolute scale of exports, corn export advantage is after Argentina and Brazil, soybean exports advantage is greater than the advantages of other countries and regions, and cotton export advantage is slightly less than India and Australia. The above three trade complementarity indices are 1.25,84.6 and 26.1 respectively, which are greater than 1 and showing strong agricultural trade relations between China and Brazil. Combination of these two indices, it is gotten that international competitiveness of Brazilian corn, soybeans and cotton are relatively strong which are the belongings of Brazil’s agricultural advantages.On this basis, Brazil’s arable land mass and situation of arable land suitable for development are analyzed. Suitable land for development of arable land is 523,896,000 ha, of which premium arable land is about 12,446,000 ha, good arable land is about 30.888 million ha and medium arable land is approximately 480,562,000 ha. Combined with the development of potential arable coefficient, the suitable arable land suitable for development of the various regions is estimated. The suitable arable land suitable for development is about 178,436,000 ha totally, of which premium arable land is about5,130,800ha, good arable land is about12,625,300ha and medium arable land is about 160,679,600ha. From the perspective of potential arable land, the main advantage of Brazil’s agricultural production potential is simulated which shows that corn potential between 26.136 million tons to 164.161 million tons, soybeans potential between 14.783 million tons to 95.072 million tons and cotton potential between 426,000 tons to 2.998 million tons.Finally, GTAP model is used to simulate the effect of different scenarios on tariff reduction for the development of agricultural production between China and Brazil. The results showed that Soybean and cotton tariff reductions are harmful for our country soybean and cotton industries, such as Production and exports reduced, and trade balance deteriorated, but Soybean and cotton tariff reductions is beneficial to other planting industry in China, such as production and exports increased, and trade balance improved. Whenever, it is beneficial to Brazil soybean and cotton industries, such as production and exports increased, and trade balance improved also, but it is harmful for other planting industry in Brazil, such as Production and exports reduced, and trade balance deteriorated also. Building FTA is favorable to China and Brazil, for GDP, the total import and export, and welfare are increased. Meanwhile, Because of the different commodity structure, it is more favorable to our country, such as trade balance improved.Through the above analysis, it provides a policy-making reference to take full advantage of Brazil’s arable land resources and protect our grain security. The following recommendations are made that the establishment of China-Brazil FTA should be promoted actively which can help to reduce agricultural trade barriers and get a relatively stable channel of Brazil’s competitive agricultural products, such as soybeans, corn and cotton; the investments of individuals or companies are encouraged in agricultural production to Brazil in order to avoid risk and achieve mutual benefit and win-win by giving technical and financial support legitimately combined with local Brazilian foreign investment regulations and the new "Forest Law".