China Ag Center  ·  Publications

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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.

US revenue changes (% and $B) by sector (top 10 winners and losers)

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.

Figure 4. China’s imports from the U.S. compared to the rest of the world (ROW), 1996-2019

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.

China’s soybean production, imports, stocks, and China’s prices and world prices

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.

cover page of MDPI article

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.

Monthly changes in China’s hog inventory

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.

cover page of Ag Decision Maker

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.

US revenue changes (% and $B) by sector (top 10 winners and losers)

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.

Locations of ASF outbreaks from 08/02/2018 to 10/30/2018

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.

Shifts in regional agricultural trade flows, 1995 and 2017

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.

Predicting China's Import Potential from the United States

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.

Summary of two Chinese retaliations on U.S. agricultural exports

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.

Agricultural land transfer to different types of entities

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.

Crop land per farmer in China in acres

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.

China’s corn production and consumption, history and projections

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.

China and US corn future prices 2005–2016

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.

The growth in the value of U.S. agricultural exports to China

Chad Hart and Lee Shulz. 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.

Summary statistics of the agricultural sector in China and the United States

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.