China's grain policy reforms: Implications for equity, stabilization, and efficiency

Abstract

Research based on extensive field interviews and county-level data for Shaanxi Province in northwest China reveals that fundamental policy changes in the grain management system during the reform era correspond with observed changes in equity, stabilization efforts, and efficiency in the rural economy. Throughout the 1980s, the grain system was consistently progressive in terms of procurement and resold grain policies, but beginning in the mid-1980s the progressivity declined. The stabilization of grain availability has been constrained by poor storage and transport infrastructure, as well as local financial and political incentives. However, liberalized production and trade measures have stimulated an increase in marketing activity by grain bureaus and private traders, especially in poor areas. Rank correlation analysis of yield and changes in sown area ratios, and observed yield ratios over time, show with significance that commercialization policies were strongly associated with better use of comparative advantage in crop production during the late 1980s.