China Ag Center · Publications
Yingdan Mei, Li Gao, Wendong Zhang, and Feng-An Yang. 2021. "Do Homeowners Benefit When Coal-fired Power Plants Switch to Natural Gas? Evidence from Beijing, China." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
Coal-fired power plants are among the biggest air polluters both in China and globally. In 2013, China launched a pilot project to switch its power plants from coal to natural gas to curb coal-fired plants’ detrimental effects on air quality. Debates about this policy mainly invoke the costs, but no study examines whether the change led to cleaner air and associated economic benefits. This article provides the first causal estimate of the capitalization effect of coal-to-gas conversion on housing prices. We estimate a triple difference model using housing transaction data from 2011 to 2015 and administrative data on all power plants in Beijing. Our results, although marginally significant, show that coal-to-gas conversion leads to a positive price premium of 11% for nearby properties. We provide suggestive evidence that our findings of positive price premiums are likely attributable to the reduction in air pollutants following the coal-to-gas switch, including a 4.9% reduction in particulate matter and 5.2% decrease in SO2.
Tao Xiong, Wendong Zhang, and Chen-Ti Chen. 2021. "A Fortune from Misfortune: Evidence from Hog Firms' Stock Price Responses to China's African Swine Fever Outbreaks." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
China is the world's largest hog producer and a leading pork importer. Since August 2018, ongoing outbreaks of African Swine Fever (ASF), a highly contagious and deadly disease affecting pigs, have hit China's livestock industries and wiped out 40% of China's pigs. We leverage data on daily stock returns from 25 major publicly listed firms from China and eight major pork-exporting countries to provide the first systematic analysis of the firm-level economic impacts of the outbreaks. We find that, on average, announcements of ASF outbreaks have led to positive and significant stock returns for both Chinese and international hog firms. China's hog firms, on average, enjoyed 10%–40% cumulative abnormal returns during the 2019 Chinese Spring Festival, when investors saw signs of a near-20% inventory loss during a peak demand season for pork. We show that larger hog firms tend to capture greater positive stock returns. Our results suggest opportunities for consolidation, expansion, and upgrades of China's meat industry that have long-run implications for its global competitiveness and efficiency.
Xi He, Miguel Carriquiry, Wendong Zhang, and Dermot J. Hayes. 2021. "Predicting China’s Corn Acreage and Production in 2021/22 and 2022/23." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
China’s corn imports exceeded its corn tariff rate quota of 7.2 million metric tons in 2020 and reached a record of 26 MMTs in the 2020/21 marketing year. While China’s recent corn import surge was largely due to its feed demand to recover its hog inventory from the African Swine Fever outbreak, the prospect for China’s corn imports is unclear. Figure 1 shows that China’s corn futures price with maturity in November 2021 declined from around $10.80 per bushel in May to $9.70 per bushel in September 2021. The current level is still high relative to the historical norm. Over this period, China’s hog futures price declined from the highest point of around $2 per pound to around $1 per pound. The hog futures price drop suggests that China’s hog inventory recovery is likely making good progress, which will put upward pressure on China’s corn imports in 2021/22 and 2022/23. The net impact will depend on China’s domestic corn production, and to estimate this we need reasonable estimates of Chinese farmers’ acreage and yield price supply elasticities.
Nieyan Cheng, Wendong Zhang, and Tao Xiong. 2021. "The Impact of China’s Place-based Environmental Regulations on its Hog Industry: A Synthetic Difference-in-differences Approach." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
Agricultural water pollution from the livestock industry is a growing concern in China and globally. As opposed to size-based regulations targeting larger facilities as in the United States, China's regulations are place-based in nature. In 2014, China classified eight urban provinces in the southeast as a Development Control Zone, which prohibits new hog facilities construction and encourages hog farms to relocate to other regions. Leveraging a novel identification strategy, synthetic difference-in-differences, and the place-based nature of China's environmental regulations, we provide one of the first systematic analyses of the impacts of the regulations on county-level hog and sow inventory. By relying on synthetic controls constructed with both county and year weights, synthetic difference-in-differences yields a more accurate and doubly robust estimate of regulations' treatment effects. Our results show that, on average, the 2014 regulations led to a 6.4% and 7.4% reduction in hog and sow inventories, respectively, from 2014 to 2017 in the treated counties in Development Control Zone provinces, mainly resulting from extensive margin changes due to the closures of existing hog farms. We also find the treatment effects vary substantially both within and across Development Control Zone provinces: wealthier urban provinces such as Zhejiang experienced greater reduction in hog and sow inventories of over 40%; and counties upstream of big cities or those designated as main hog counties saw steeper declines as well.
Xi He and Wendong Zhang. 2021. "China’s Changing Population Structure and its Implications for US Agricultural Exports." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
On May 11, 2021, China released the findings from its seventh national population census, which shows that its population totaled 1.41 billion in 2020 with an average annual growth rate of 0.053% since 2010, the lowest ten-year growth rate since its first population census in 1953. China’s population structure is also changing—a growing share of residents are older than 65 and the birth rate is declining. Specifically, China’s total new births sharply declined by around 18%, from 14.65 million in 2019 to 12 million in 2020, despite some skepticism that the birth rates might be overreported and the death rates may be underreported. On May 31, 2021, China announced that it will allow couples to have up to three children and will provide supportive measures to improve its population structure and to actively cope with an aging population after scrapping its decades-old one-child policy and adopting a two-child policy in 2016.
Xi He, Edward J. Balistreri, Gyu Hyun Kim, Tao Xiong, Wendong Zhang. 2021. "A General Equilibrium Assessment of COVID-19’s Labor Productivity Impacts on China’s Regional Economies." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
This study introduces a database that can be used to analyze COVID-19’s impacts on China’s regional economies. This database contains various sectoral and regional economic outcomes. In the context of a general equilibrium trade model, we utilize the provincial and sectoral value-added and national trade series to estimate COVID-19’s province-by-month labor-productivity impacts. Compared to February 2019 levels, we find an average 37.9% decrease in labor productivity (equivalent to around 293 million jobs) and an average 20.8% decrease in welfare across provinces in February 2020. Both labor productivity and welfare have recovered quickly since April 2020. As of September 2020, average provincial labor productivity increased by 29.8% (equivalent to around 230 million jobs) and average welfare increased by 14.7% relative to their September 2019 levels.
Dermot Hayes, Xi He, and Wendong Zhang. 2021. "Is China’s Hog Rebuilding Complete? Reconciling Inventory and Price Data." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
The African swine fever outbreak that started in August 2018 wiped out 40% of China’s sow inventory. China has been making substantial efforts, including subsidizing large hog producers and encouraging industrialization and modernization of hog production, to rebuild and expand its pork production. While China’s governmental inventory data as of December 2020 show sow and hog inventory were 92.1% and 93.1% of their respective 2017 levels, recent record-high piglet, sow, hog, and pork prices suggest a large persistent supply shortage. China’s record pork and live swine imports in 2020 suggest that China’s hog rebuilding might be fast but of low genetic quality. Specifically, it seems likely that the retention of low-quality commercial generation gilts helped rebuild the herd but set back the national breeding system by abandoning purebred grandparents and parent generation propagation.
Wendong Zhang. 2020. "The Case for Healthy U.S.-China Agricultural Trade Relations despite Deglobalization Pressures." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
The COVID-19 pandemic is crippling the global economy and heightening distrust and political disagreements among major countries. Furthermore, ongoing deglobalization efforts taken by firms and countries are fueling the rise of economic nationalism. A prime example is the possible decoupling of U.S.-China economic and trade relations, which the ongoing trade war has already significantly disrupted. This paper analyzes the impacts of COVID-19 on U.S. agricultural exports to China, especially the added delays and uncertainty on China's food imports meeting the U.S.-China phase one trade deal target. I present the views of U.S. farmers and the general public toward China and argue that healthy U.S.-China agricultural trade relations are not only critical for both countries but welcomed by U.S. farmers. I also discuss the possible rise in non-tariff barriers following the pandemic as well as trade policies that are increasingly intertwined with political tensions. Finally, I discuss how the U.S.-China phase one trade deal could possibly lead to a more balanced bilateral agricultural trade portfolio with greater share of protein and retail food products.
Dermot Hayes, Xi He, and Wendong Zhang. 2020. "The Impact of Flooding on China’s Agricultural Production and Food Security in 2020." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
In June and July of 2020, severe flooding decimated crops in several of China’s southern provinces. By August, China’s State Council Information Office estimated that heavy rainfalls had affected 27 provinces, 63,000,000 people, and led to a direct loss of $26 billion. He, Hayes, and Zhang examine the impact of the flooding and find that it affected 23% of the planted area of summer crops, caused 4.3% crop failure, and increased meat and vegetable prices, but not grain prices. They also find that China increased its grain imports this year, which could partially counteract its grain production loss from the flooding and help dampen the impact on national food security.
Dermot Hayes, Xi He, and Wendong Zhang. 2020. "Upheaval in China’s Corn Market: Will China expand its Tariff Rate Quota for Corn?" Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
China has recently expanded its US agricultural product imports, partially due to the terms of the phase one trade deal and partially due to recent flooding in some of its largest agricultural-producing provinces (also examined in this issue of APR). He, Hayes, and Zhang examine recent price changes and changes in demand for corn in China and find that China will easily exceed its corn TRQ of 7.2 million metric tons in 2020.
Yongtong Shao, Minghao Li, Dermot J. Hayes, Wendong Zhang, Tao Xiong, Wei Xie. 2020. "China’s Missing Pigs: Correcting China’s Hog Inventory Data Using a Machine Learning Approach." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
Small sample size often limits forecasting tasks such as the prediction of production, yield, and consumption of agricultural products. Machine learning offers an appealing alternative to traditional forecasting methods. In particular, Support Vector Regression has superior forecasting performance in small sample applications. In this article, we introduce Support Vector Regression via an application to China’s hog market. Since 2014, China’s hog inventory data has experienced an abnormal decline that contradicts price and consumption trends. We use Support Vector Regression to predict the true inventory based on the price-inventory relationship before 2014. We show that, in this application with a small sample size, Support Vector Regression out-performs neural networks, random forest, and linear regression. Predicted hog inventory decreased by 3.9% from November 2013 to September 2017, instead of the 25.4% decrease in the reported data.
Xi He and Wendong Zhang. 2020. "Implications of Hong Kong’s Special Status Revocation for Agricultural Trade between the United States, Hong Kong, and Mainland China." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
In 1992, the United States granted Hong Kong status as a customs territory separate from mainland China. On June 29, 2020, however, the US Department of Commerce withdrew that status due to recent tensions between China and the United States. Hong Kong, as the world’s largest re-exporting port, plays a large intermediary role in US-China trade, and the revocation of its special status may provoke China into taking retaliatory economic and/or political actions. He and Zhang examine trends in Hong Kong’s import/export of US agricultural products and how that trade may be affected. They find that the revocation itself is not likely to directly affect US-China agricultural trade prospects much if neither China nor the United States responds with further actions.
Chen-Ti Chen, Tao Xiong, and Wendong Zhang. 2020. "Large Hog Companies Gain from China’s Ongoing African Swine Fever." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
Since November 2018, China has reduced its hog and sow inventory by almost 32% due to ongoing outbreaks of African swine fever. These reductions—103 million pigs and 8.7 million sows—account for more than one-fifth of the world’s hog inventory, but they may come as a blessing in disguise for large hog companies. Chen, Xiong, and Zhang examine stock returns for China’s 10 largest hog firms and 15 global hog firms and find that China’s hog companies saw positive abnormal stock returns following ASF outbreaks.
Xi He, Dermot J. Hayes, Wendong Zhang. 2020. "China’s Agricultural Imports under the Phase One Deal: Is Success Possible?" CARD Policy Brief. Center for Agricultural and Rural Development, Iowa State University.
We examine China’s committed agricultural purchases under the phase one trade deal and whether it can fulfill those commitments due to the COVID-19 pandemic. We review China’s actual agricultural imports from the United States and other countries up to the first quarter of 2020 and analyze trade deal obligations China must still meet by the end of 2020. We use prior seasonal patterns and US-China price differentials to predict China’s agricultural imports from the United States in 2020. We examine total agricultural and related products with special focus on corn, soybeans, cotton, sorghum, pork, and beef.
The data show China currently has an enormous market demand for agricultural imports, and, to date, has imported large quantities of pork, cotton, sorghum, and soybeans from the United States. However, China imports an even greater amount of agricultural products from other countries, which, in part, reflects a continued diversification away from US agricultural imports before and during the trade war. We predict China will import $18.60 billion in agricultural products from the United States in 2020, far behind the phase one target of $36.5 billion.
Wendong Zhang and Tao Xiong. 2020. "The coronavirus will delay agricultural export surges promised in trade deal with China." . The Conversation.
The novel coronavirus has shocked the world’s economies.
The virus has spread to more than 100 countries and many U.S. states. This has rattled global stock markets, plunging the Dow more than 2,000 points on March 9 – the biggest one-day drop since the 2008 Great Recession.
Concerns about potential global economic decline has made implementation of the U.S.-China phase one trade deal uncertain. This deal requires China to purchase an additional US$12.5 billion worth of U.S. agricultural products in 2020, and $19.5 billion more in 2021.
In our recent research on the impacts of the U.S.-China trade war on U.S. agriculture, we argue that China has the capability to make these purchases, despite delays and disruptions to supply chains and trade flows caused by the coronavirus. A resilient and recovering Chinese economy means the country can comply with the trade deal and potentially minimize damage to the U.S. economy from an ongoing trade war.
Wendong Zhang. 2020. "US-China Phase 1 Trade Deal and US agriculture: A big win for farmers or too good to be true?" Ag Decision Maker. Iowa State University Extension and Outreach.
Almost two years after the start of the US-China trade war, leaders of both countries signed the highly anticipated Phase 1 trade deal on January 15, 2020. This is especially significant politically and symbolically because this deal represents the first time both countries made moves to actually reduce the tariff rate rather than escalate the situation. In the 88-page deal, China makes historic and bold promises regarding buying US goods and services, pledging to buy an additional $200 billion worth of US products in 2020 and 2021. In particular, China promises to purchase an additional $12.5 and $19.5 billion of US agricultural products in 2020 and 2021, respectively. If realized, these will be the two highest agricultural export watermarks for US-China agricultural trade ever. However, the commodity markets did not show a significant rally as hoped, but instead exhibited noticeable drops. In this article, I will share key details of the Phase 1 deal, focusing on its agricultural provisions, and share my personal opinions and thoughts about the deal and its implications for US and global commodity markets and agricultural exports.
Chad Hart and Lee Schulz. 2020. "The Phase One Trade Deal: Projections and Implications." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
Chad Hart and Lee Schulz examine the “Phase One” trade deal and determine how it will affect US imports and exports and trade relations with major trading partners. Hart and Schulz find that the USMCA and Japan agreements concentrate on solidifying existing trade flows, rather than significantly expanding trade opportunities. The new trade deals maintain and protect US trading relationships with Canada, Mexico, and Japan, with the prospect for continued, but limited, growth. The China deal, on the other hand, has the potential to radically change global trade flows.
Hart and Schulz are both CARD and Extension economists. Hart is a crop market specialist and Schulz is a livestock industry specialist. Schulz and Hart’s APR articles examine the largest factors currently influencing some of the United States’ largest agricultural industries (Production Projections and Trade Adjustments and Volatile Prices and Profit Margins).
Edward J. Balistreri, Wendong Zhang, and John Beghin. 2020. "The State-level Burden of the Trade War: Interactions between the Market Facilitation Program and Tariffs." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
As the Trump Administration works with China’s President Xi to pen a new US-China trade deal, Ed Balistreri, Wendong Zhang, and John Beghin examine the current US-China trade war and its uneven distribution of impacts on US states. The authors find that the distribution of Market Facilitation Payments created “winner” and “loser” states; that is, for some states, the MFP payments totally offset the incidence of tariff retaliation, and for others they don’t. Interestingly, they note that while most of the winner states are “red” states that voted for President Trump in 2016, key “purple” battleground states, such as Michigan, Ohio, Wisconsin, and Pennsylvania, didn’t receive large enough MFP payments to offset tariff retaliations.
Balistreri and Zhang are both CARD economists that have examined the US-China trade war in depth. They both helped author “The Impact of the 2018 Trade Disruptions on the Iowa Economy,” a CARD series paper that was the first to determine the fiscal impacts the US-China trade war would have on Iowa’s economy.
Miguel Carriquiry, Amani Elobeid, Dermot Hayes, and Wendong Zhang. 2019. "Impact of African Swine Fever on US and World Commodity Markets." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
Recent outbreaks of African Swine Fever in Vietnam, Cambodia, Laos, South Korea, and especially China, have generated interest in how world commodity markets will adjust in response to pig herd losses due to the disease and to panic culling to avoid the negative impacts of the disease. This adjustment is complicated by the retaliatory duties that China has placed on US soybean and pork exports and the duration of temporary exemptions on these tariffs. It is clear that a scarcity of pork will cause a reduction in pork consumption in impacted countries and a switch to alternative proteins. It is also clear that countries (such as the European Union and Brazil) who have direct access to China’s pork and chicken markets will see an increase in exports. What is less clear is the second-round impact of these adjustments. Will the United States ship more pork to markets vacated by the European Union and Brazil as these countries pursue lucrative markets in China? What is the net impact on US and world soybean and corn exports and prices? What would be the implications for the United States if China removes retaliatory duties?
John M. Crespi and Chen-Ti Chen. 2019. "Global Competition Made 2018 a Bad Time to Start a Trade War." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
The United States is one of the largest players in the international agricultural market. With the continued growth of its agricultural output, the US agricultural sector has relied heavily on export markets to maintain its competitiveness and profitability. In fact, projections show the United States will export $137 billion in agricultural commodities in 2020. However, the 2018 trade disruptions with Canada and Mexico that led to a renegotiated, but still unratified NAFTA-like treaty (the USMCA) and the presently unresolved trade dispute between the United States and China have adversely impacted US agricultural exports. Of concern is how such disruptions might affect the competitive structure of markets. Today, Iowa farmers are concerned about the long-run implications of the trade disruptions to exports of major importance, especially beef, corn, pork, and soybeans. In this article, we discuss a metric of the historical export performance of these commodities from 1980 to 2018 and show that the trade disruptions occur at a time when the United States is in a particularly precarious position. At the outset of the trade disruptions in 2018, Iowa farmers faced the most competitive markets they had ever faced for these commodities. The longer the disruptions continue, the harder it will be to regain market share in the future.
Shuyang Qu, Wendong Zhang, Minghao Li, Lulu Rodriguez, Guang Han, Erin Cork, James M Gbeda. 2019. "Midwest Crop Farmers’ Perceptions of the U.S.-China Trade War." CARD Policy Brief. Center for Agricultural and Rural Development, Iowa State University.
We provide the first micro-level analysis of farmers’ perceptions and views of the U.S.-China trade war. We asked farmers in Minnesota, Iowa, and Illinois with at least 250 operating acres of corn or soybeans from February to April 2019. Our results show that despite the immediate negative economic impacts they have experienced, over 56% were still somewhat (38%) or strongly supportive (22%) of President Trump’s tariffs on Chinese products. This relates, in part, to the 2018 Market Facilitation Program payments that a vast majority of farmers (86%) find at least somewhat useful. We find that in general, our farmer-respondents largely view the trade disruption as a short-term-pain/long-term-gain phenomenon. At the same time, a vast majority (76%) recognize that American farmers will bear the brunt of the tariffs imposed by China, and 62% agree that U.S. agriculture is likely to lose markets. In addition, a majority of our sample harbor five “pain points” related to China: poor intellectual property protection, the trade deficit, the U.S. Treasury debt it holds, cyber-economic espionage, and job losses to China. Finally, Fox News, farm bureaus, and Successful Farming magazine were the most frequently cited information sources by farmers.
Minghao Li, Edward J. Balistreri, Wendong Zhang. 2019. "The U.S.-China trade war: Tariff data and general equilibrium analysis." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
The current trade war between the United States and China is unprecedented in modern history. This study introduces a database of tariff increases resulting from the recent trade war and quantifies the impacts using the canonical GTAPinGAMS model calibrated to the recently released GTAP version 10 accounts. We find that the tariff increases as of September 2019 decrease welfare in China by 1.9% and welfare in the U.S. by 0.3%. Impacts on sectoral revenue are reported for both countries. China’s exports to and imports from the United States are reduced by 58.3% and 50.7%. Most of the reductions in bilateral trade are absorbed by trade diversion to other countries. The welfare and U.S.-China bilateral trade impacts are exacerbated by additional tariffs threatened by the United States and corresponding retaliations from China. Sensitivity analysis is conducted by increasing and decreasing import substitution (Armington) elasticities by two standard deviations. This has modest impacts on welfare and trade flow results.
Tao Xiong and Wendong Zhang. 2019. "Who benefits most from China’s growing import demand due to African Swine Fever?" Ag Decision Maker. Iowa State University Extension and Outreach.
China is home to half the pigs in the world, and the African Swine Fever (ASF) that started in August 2018 is a perfect reminder that China increasingly should be treated as a market setter or major influencer in the global agricultural trade market. Li et al. (2019) provided an update on the evolution of ASF cases in China: Although the culled pigs remains modest at 1 million pigs, the official statistics from the Ministry of Agriculture and Rural Affairs of China show that since August 2018, China has lost at least 85 million head of hogs and almost 10 million sows, which is almost equivalent to the entire U.S. inventory. Several provincial reports showed a 35–40% reduction in hog inventory due to ASF. Currently pork still accounts for more than half of the meat consumed by the Chinese and the dominance of pork in the Chinese diet will continue for at least the next decade. The significant shortages in supply due to ASF and subsequent quarantine actions have resulted in an urgent need for China to buy meat products from the global market. This article examines how ASF in China has influenced China’s global meat and feed grain imports, and in particular, which countries benefit most from China’s growing import demand due to ASF.
Wenting Wang & Longbao Wei. 2019. "Impacts of Agricultural Price Support Policies on Price Variability and Welfare: Evidence from China’s Soybean Market." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
As the world’s largest importer of agricultural commodities, China’s agricultural policies have significant implications for the world agricultural market. For the first time, we develop an aggregate structural econometric model of China’s soybean market with linkage to the rest of the world to analyze the worldwide impacts of China’s soybean price support policies from 2008 to 2016. We investigate the impacts of China’s policies on the variability of their domestic and world prices, and adopt a Monte Carlo simulation to evaluate the distributional and aggregate welfare effects. Results indicate that (a) China’s soybean price support policies play an effective role in stabilizing their domestic price, while its increasing imports absorb world production surplus and reduce world price swings; (b) China’s producers gain at the expense of consumers and budgetary costs, and the net welfare change in their domestic market is negative; (c) Soybean exporting countries experience considerable welfare gains, and the world net welfare change is positive. Our findings provide new insights for future trade negotiations and agricultural market reforms in developing countries.
Pingping Wang, Wendong Zhang, Minghao Li and Yijun Han. 2019. "Does Fertilizer Education Program Increase the Technical Efficiency of Chemical Fertilizer Use? Evidence from Wheat Production in China." Sustainability 2019, 11(2), 543; doi:10.3390/su11020543. MDPI.
Farmers in China and many other developing countries suffer from low technical efficiency of chemical fertilizer use, which leads to excessive nutrient runoff and other environmental problems. A major cause of the low efficiency is lack of science-based information and recommendations for nutrient application. In response, the Chinese government launched an ambitious nationwide program called the “Soil Testing and Fertilizer Recommendation Project” (STFRP) in 2005 to increase the efficiency of chemical fertilizer use. However, there has been no systematic evaluation of this program. Using data from a nationally representative household survey, and using wheat as an example, this paper first quantifies the technical efficiency of chemical fertilizer use (TEFU) by conducting stochastic frontier analysis (SFA), then evaluates the impact of STFRP on the TEFU using a generalized difference-in-difference approach. We found that STFRP, on average, increased TEFU in wheat production by about 4%, which was robust across various robustness checks. The lessons learned from STFRP will be valuable for China’s future outreach efforts, as well as for other countries considering similar nutrient management policies.
Minghao Li, Tao Xiong, Yongjie Ji, Dermot Hayes, and Wendong Zhang. 2019. "African Swine Fever in China: An Update." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
After suffering a major blow from trade disruptions with China and Mexico, U.S. pork producers are keeping close watch on African Swine Fever in China and other countries. The first case of African Swine Fever in China was confirmed August 2, 2018 in the northeastern city of Shenyang. According to our information, by the end of October 2018, there were 45 cases of ASF in China with 5,439 pigs infected and 3,841 pigs dead.
Wendong Zhang. 2019. "Seven things to know about China to understand the trade war." Ag Decision Maker. Iowa State University Extension and Outreach.
The year 2018 witnessed arguably the largest trade war in human history, and the trade disputes between the United States and China quickly escalated to a scale without precedent. As of now, the United States imposed tariffs on more than $250 billion worth of products from China, and China retaliated with tariffs on more than $110 billion worth of US products, including notably substantial tariffs on US agricultural products such as soybeans, pork, and ethanol.
Li Gao, Wendong Zhang, Yingdan Mei, Abdoul G. Sam, Yu Song, and Shuqin Jin. 2018. "Do Farmers Adopt Fewer Conservation Practices on Rented Land? Evidence from Straw Retention in China." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
We examine how land tenure arrangements affect Chinese crop farmers’ adoption of straw retention, a key conservation practice promoted by the Chinese government in part to curb rising air pollution. Using data from a 2016 farmer household survey covering 1,659 crop plots in Henan Province in central China, we analyze whether farmers are less likely to adopt straw retention on rented plots compared to own-contracted plots. To address the potential endogeneity of the choice of renting from others, we use an instrument exploiting the role of remittance income from household members migrated to cities in a bivariate probit model and a control function approach, respectively. Our main results reveal that the Chinese crop farmers’ likelihood of adopting straw retention were almost cut in half on rented plots compared to their owned plots, assuming the assumptions for biprobit or control functions hold. This suggests greater attention is needed to examine the spillovers across agricultural and environmental policies as China pushes for both a nationwide land rental market and more sustainable agricultural practices.
Minghao Li, Wendong Zhang, and Chad Hart. 2018. "Lessons from Previous U.S.-China Trade Disputes." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
Trade issues have recently erupted between the United States and China and the battle over newly announced tariffs has escalated quickly. At the beginning of 2018, the United States imposed tariffs on imported solar panels and washing machines, and China responded by initiating an anti-dumping investigation into US sorghum. In early March, President Trump announced steel and aluminum tariffs with China being one of the primary targets. Within two weeks, China responded by announcing a list of 128 US products that are the targets of retaliatory tariffs effective on April 2, 2018. The list included pork products and ethanol, which are of critical importance to the US Midwest. As those tariffs went into effect, the US Trade Representative announced 25 percent tariffs on $50 billion worth of Chinese imports, along with investment restrictions, and the submission of a case to the World Trade Organization over China’s trade practices. The Chinese government responded immediately with its own tariff package, targeting roughly $50 billion of US imports, including the largest agricultural import, soybeans. For both the United States and China, the $50 billion tariffs are scheduled to take effect in a couple of months. The volleying may continue as President Trump has mentioned the possibility of another round of proposed tariffs on a list of Chinese imports with $100 billion in value.
Minghao Li, Edward J. Balistreri, Wendong Zhang. 2018. "The 2018 Trade War: Data and Nascent General Equilibrium Analysis." CARD Series Working Paper. Center for Agricultural and Rural Development, Iowa State University.
This study introduces a database of 2018 tariff increases resulting from the recent trade war and quantifies the impacts using the canonical GTAPinGAMS model calibrated to GTAP version 9 accounts. We report relatively modest economy-wide welfare impacts in this perfect-competition Armington model, with substantial impacts on the pattern of trade and output in important sectors.
Yongtong Shao, Minghao Li, Wendong Zhang, Yongjie Ji, and Dermot Hayes. 2018. "World’s Largest Pork Producer in Crisis: China’s African Swine Fever Outbreak." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
After suffering a major blow from trade disruptions with China and Mexico, U.S. pork producers are keeping close watch on African Swine Fever in China and other countries. The first case of African Swine Fever in China was confirmed August 2, 2018 in the northeastern city of Shenyang. According to our information, by the end of October 2018, there were 45 cases of ASF in China with 5,439 pigs infected and 3,841 pigs dead.
Edward J. Balistreri, Chad E. Hart, Dermot J. Hayes, Minghao Li, Lee Schulz, David A. Swenson, Wendong Zhang, John M. Crespi. 2018. "The Impact of the 2018 Trade Disruptions on the Iowa Economy." CARD Policy Brief. Center for Agricultural and Rural Development, Iowa State University.
Over the past two years, U.S. trade policy has shifted dramatically and several trade disputes have erupted. From the uncertainty of the ongoing NAFTA renegotiations to the multiple rounds of tariff increases between the United States and China (including a new round on September 18, 2018, as this report was being written), U.S. producers and consumers are adjusting to shifting export/import patterns and higher costs of international trade. Given the importance of international trade to the Iowa economy, we undertook an examination of impacts to Iowa’s economy from the current set of trade disputes.
Minghao Li, Wendong Zhang, Dermot J. Hayes. 2018. "China’s Agricultural Import Potential." CARD Policy Brief. Center for Agricultural and Rural Development, Iowa State University.
As part of the current trade negotiations between the United States and China, China has suggested that it may lower trade barriers and increase agricultural imports from the United States. In this policy brief, we provide an overview of China’s tariff and non-tariff trade barriers and estimate China’s import potential if these barriers are removed. We find that China’s importation of major U.S. commodities has the potential to increase significantly. For example, in our medium-growth scenario, China will potentially increase U.S. pork import value by $8.9 billion if all trade barriers are removed.
Minghao Li, Wendong Zhang, and Chad E. Hart. 2018. "What Can We Learn about U.S.-China Trade Disputes from China’s Past Trade Retaliations?" CARD Policy Brief. Center for Agricultural and Rural Development, Iowa State University.
With United States exporting over $24.1 billion worth of agricultural and related products to China every year, it is difficult to overestimate the importance of the trade relationship. This is why the trade issues that are currently brewing between the United States and China are making stakeholders in the U.S. agricultural industry nervous, fearing that agricultural products will be the target for China’s retaliatory measures. Just last week, China announced that it may enact 15% tariff on ethanol and 25% tariff on pork products in response to the U.S. steel and aluminum tariffs. In this article, we hope to shed light on some key guiding principles of China’s potential actions in the future by analyzing previous agricultural trade retaliations involving the United States and other countries. We argue that China’s previous choices of retaliation targets follow three principles: targeting products that are proportional in trade value, targeting products that are substitutable, and targeting products that inflict economic and political cost. Since the U.S. steel and aluminum tariffs only affects about $3 billion-worth Chinese exports and U.S. soybean exports exceeds $12 billion, soybeans is not part of China’s response this round because of the proportional retaliation principle. However, U.S. soybean exports, despite its critical significance to China and difficulties to substitute or displace, might be brought into the trade drama if the new proposed tariff on $50 billion Chinese goods are enacted.
Minghao Li, Wendong Zhang, and Dermot Hayes. 2018. "Can China’s Rural Land Policy Reforms Solve its Farmland Dilemma?" Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
China faces two challenges: (a) preserving the quantity and quality of its arable land amid rapid urbanization; and, (b) consolidating land to increase agricultural productivity. China’s recent rural land reforms on these two aspects have implications not only for China, but the entire world.
Wendong Zhang and Minghao Li. 2018. "Navigating the Chinese Agricultural Economy through the Lens of Iowa." Ag Decision Maker. Extension and Outreach, Iowa State University.
With one in every four rows of U.S. soybeans exported to China, the significance of China on the U.S. agricultural trade and economy can’t be overestimated. This relationship is particularly unique to Iowans with Iowa’s long-time former Governor Terry Branstad now serving as the U.S. ambassador to China. In this article, we showcase key aspects of China’s agricultural economy using Iowa as the measuring stick.
Minghao Li, Wendong Zhang, Dermot Hayes, Riley Arthur, Yantao Yang, and Xiudong Wang. 2017. "China’s New Nationwide E10 Ethanol Mandate and Its Global Implications." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
China announced the plan to implement a nationwide E10 (gasoline with 10% ethanol) mandate, by 2020. This mandate will require the fuel ethanol consumption in China to increase by four times. Even if China manages to build enough refineries in the short time, feedstock supply, which is mostly corn, will eventually run into shortage, creating opportunities for ethanol and/or corn importers.
Qianrong Wu and Wendong Zhang. 2016. "Of Maize and Markets: China’s New Corn Policy." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
Before 2016, Chinese farmers is protected by a price support program that kept domestic price at about 2~3 times the US price. This support price not only incurred huge cost in payments, but also built up a corn stock that’s more than half of the world’s total stock. Starting from 2016, China switched from the price support to a producer support determined by acres planted. This is a sign that China is downplaying the strategic role of corn, which suggests the possibility of a transition towards greater involvement in the global marketplace.
Chad Hart and Lee Schulz. 2015. "China’s Importance in U.S. Ag Markets." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
There’s been a lot of news about China in the last few weeks, from their currency devaluation to significant stock market fluctuations to recent agricultural purchase agreements. Many of these news stories try to address the question of the importance of China to the US economy and assess the impact of Chinese economic shifts on the United States. For agriculture, the importance of the Chinese market has grown significantly over the past decade; however, the impact is targeted at specific sectors within agriculture.
Wendong Zhang. 2015. "The Commonalities and Differences between Chinese and U.S. Agriculture." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
China and the US both have a multibillion dollar agricultural industry operating under market mechanism but with heavy government intervention. While the ag industries in the two countries share some common opportunities and challenges related to environment and technology, they also have drastically different natural endowments, policy environments, and market conditions. In this report, Wendong shares his observations of these commonalities and differences.
Dermot J. Hayes. 2013. "Agricultural Trade Opportunities with China." Agricultural Policy Review. Center for Agricultural and Rural Development, Iowa State University.
China now produces about 52 million tons of pork and 14 million tons of poultry per year. Increased consumer demand, a reduction of available producers and available land, disease, and other factors all contributed to a spike in pork prices in the summer of 2008 and 2011. The Government responded to these price increases by allowing for short term, massive increases in meat imports. It must now decide whether it wishes to achieve food security and affordability by allowing imports to moderate price levels or to target meat self-sufficiency by means of trade barriers.