The Measurement Of Armington Elasticity Of Substitution And Welfare Analysis Of China's Dairy Products

With the continuous development of China's economy,people's living standards have generally improved.One of the important indicators for measuring the living standards of a country's residents includes the consumption of dairy products.China is not only a big importer of dairy products,but also a big consumer,especially with the continuous improvement of the per capita income level of residents in China,the accelerating pace of China's urbanization and poverty reduction,and the liberalization of the Two-child policy,it is expected that the imports of China's dairy products will have a further increase.Imports of dairy products are not only related to the welfare level of dairy enterprises and consumers in China,but also related to the country's strategy.Therefore,with the liberalization of the Two-child policy,it is of great practical significance to attach importance to the import of dairy products in China and ensure the import safety of dairy products in China.This article first analyzes the characteristics of China's import trade of dairy products,including China's surge increase in imports of dairy products,the expansion of trade deficits,the rapid increase in the prices of imported dairy products,and the rapid increase in milk powder imports.Secondly,using the import data of China's dairy products from 2001 to 2015,we calculated the Armington elasticity of substitution among 18 major import countries of dairy products,EU countries,APEC countries and ASEAN countries under the HS96 classification,and empirically analyzed dependence on different foreign markets of dairy products in China.Thirdly we analyze the export output elasticity of China's 18 major dairy importing countries to ensure the safety of China's dairy imports.Fourth,using the ECM model to estimate the elasticity of long-term and short-term Armington elasticity,we will further study the volatility of China's dairy products import welfare caused by changes in tariffs and thus import price changes.Finally,according to the research results of the full text,starting from the national level,the level of dairy enterprises and the level of consumers,we put forward corresponding policy recommendations for China's dairy product import security and safeguarding the interests of all parties.The results of the study show that:(1)Since the accession to the WTO,the import volume of dairy products in China has increased rapidly,and the source countries of import have been highly concentrated.This article calculates the output elasticity of dairy products exported from 18 major dairy products importing countries in China from 2010 to 2014.The study found that the export output elasticity of dairy products in Denmark and Canada is less than 1 year-on-year,indicating that dairy products are mainly used for domestic consumption rather than export.If China over-relates on these countries,it will increase the risk of dairy products import in China.Although there are some fluctuations in the output elasticity of dairy products such as Austria,Chile,Thailand,and the United Kingdom,it is believed that with the advancement of the Belt and Road,China's economic exchanges with these countries will become closer,and thus can China eases the import risk of dairy products in China.In addition,the export elasticity of dairy products in Belgium,France,Germany,Ireland,Italy,the Netherlands,Poland,Spain and other European countries is greater than 1 year-round.Other countries such as the United States,Argentina,Australia,and New Zealand are also the same.Therefore,they can all become the major source countries for China's future dairy imports.(2)By constructing a panel data model,we measured the Armington elasticity of substitution of 18 major import countries,EU countries,APEC countries and ASEAN countries of dairy products in China from 2001 to 2015.The values of Armington elasticity of substitution of the first three countries are 0.0000861,0.0000212 and 0.000032 respectively.The lower values of Armington elasticity of substitution of dairy products indicates that the relative consumption demand of dairy products at home and foreign is relatively insensitive and relatively dependent on relative price changes and is insufficient to protect the domestic dairy products industry from the threat of competition from imported products.(3)Using the ECM model to estimate the long-term and short-term Armington elasticities of substitution of dairy imports from 1995 to 2015,the values were 0.156 and 0.06,respectively.This shows that although the short-term Armington elasticity of substitution of imported dairy products is slightly less than long-term,the long-term and short-term substitution elasticity is generally far less than one.This shows that in both the short and long term,due to the large difference in quality between domestic dairy products and international dairy products,China's dairy products are highly dependent on foreign markets.Then,the long-term and short-term Armington elasticity of substitution was substituted into the welfare change formula,and the fluctuation of China's import welfare caused by changes in tariffs and import price changes was further studied.The results show that the impact of imported dairy products on the welfare of consumers in China fluctuates greatly,which seriously damages the welfare level of dairy consumers in China.According to the conclusion of this study,China's dairy products import has a high dependence on foreign markets,and China's residents have almost rigid demand for dairy products.Therefore,in the short-term and longer periods,China's dairy products will inevitably be imported in large quantities.Therefore,this article proposes the following suggestions for China's dairy trade:(1)Firstly,from the government's point of view,relevant suggestions for improvement were put forward on aspects of production,consumption,market and security,and import and export trade.This includes broadening the country of origin of dairy products imported from China,increasing foreign investment in dairy products,intensifying policy support,strengthening positive publicity for domestic dairy brands,and actively promoting the construction of dairy products industry chains.(2)Secondly,From the perspective of dairy enterprises,we should start with the acquisition of milk sources,and then go to the processing and production of dairy products,and finally to the sales and trade of products and make corresponding improvements.(3)Thirdly,from the consumer's point of view,we should learn to distinguish authenticity from blind worship of foreign dairy products,and do not recognize domestic dairy products at all.