Public investment and China’s long-term food security under WTO

Abstract

As the world’s most populous nation, China has taken various measures to increase grain production output in the past several decades. However, many of the policy interventions to promote grain production are not in conformity with WTO rules and also lead to misallocation of resources and loss of production efficiency. While adequately steady growth of grain output may still be a policy goal for the world’s most populous nation with continuous population growth and economic development, it is crucial that the country moves away from many of its past measures and explores alternative policy tools to strengthen domestic grain production. By using agricultural research and irrigation as a proxy, this paper examines the effects of public investment in irrigation and agricultural research on the output increase of grain production in China in a crop-specific manner. The research finds that increasing public investment in agricultural research will bring about higher output in a cost effective manner. Increasing public investment in agricultural R&D, etc., should be considered with high priority in the future to be utilized as a policy tool to enhance long-term food security.