Box 5-1. Outcomes for China.

China's development has major impacts on both current and fu­ture food markets of the world. Key results from a disaggregated, partial agricultural equilibrium model are presented below:

Crop production

Under the baseline (or reference) run, total crop area will gradually decline. In addition, wages are predicted to rise as will the opportu­nity cost of land for agricultural production. Why? The main drivers of these shifts are industrialization, urbanization and the slowing of the rate of growth of population (as well as labor supply). Sown area is projected to decline by about 10%, which implies an annual rate of 0.2 over the next 50 years (Table 5-27). The decline will be largest for the cereal sector. In contrast, the sown area of crops with positive income elasticities of demand (e.g., cash crops) will expand slightly. Non-staple crop yields will grow in the reference world since the rising demand for these commodities will lead to higher prices which, in turn, will induce enhanced productivity from investment in these sectors (both in R&D and in production).

Table 5-27. Area and yield of major agricultural commodities, China (in million hectares and tonne per hectare, respectively).

Source: CAPSIM reference run.

Implications for food security, poverty and equity

China's economic growth and trade liberalization in the reference world will facilitate many changes in the basic structure of agricul­tural sector. China's agriculture will be gradually shifting from crops in which its farmers have less comparative advantage (i.e., land-intensive sectors, such as grains, edible oils, sugar and cotton) to

those in which farmers have more comparative advantage (labor-intensive crops, such as vegetables, fruit, pork and poultry).

     Overall, China's food security will remain high. While there will be a few agricultural and food commodities that could experience a significant decline in national self-sufficiency levels (for example maize, soybeans and edible oils, sugar and ruminant meats, as shown in Table 5-28, rising imports of these few commodities will not threaten the basic food security status of either China or the world. Cereal imports will rise, but cereal self-sufficiency will remain at about 90% in 2020 and above 85% through 2050. Cereal imports rise mainly because of increasing demand for feed (especially, maize). Rising feed demand is inextricably linked to the rapidly growing livestock sector. Self-sufficiency in maize will fall from the current level of more than 100% (China actually was a net maize exporter in the 1990s and 2000s) to less than 70% after 2020. However, due to declining demand for rice and wheat (on a per capita basis) and the falling rates of population growth (with nearly no growth in the 2020s and falling population num­bers thereafter), our projections suggest that China could reach near self-sufficiency in wheat and become a large exporter of rice into international markets, as long as the rest of the world liberal­izes their agricultural sectors.

Table 5-28. Self-sufficiency levels of selected major agricultural commodities in China (in percent).

Source: CAPSIM reference run.

     Outside China, a rapidly growing Chinese economy will help those countries with a comparative advantage in land-intensive products. Such countries (such as Brazil, Argentina, Brazil, the US, Canada and Australia) will expand their production and in­crease their exports to China. Developing countries, in particular,

continued