China’s Integration with the Global Economy

China’s Integration with the Global Economy

WTO Accession, Foreign Direct Investment and International Trade

Advances in Chinese Economic Studies series

Edited by Chunlai Chen

China’s accession to the World Trade Organization (WTO) in 2001 was widely regarded as a major milestone in the development of the Chinese economy as well as the multilateral trading system. This book provides a remarkable background of information about China’s economy after WTO accession and analyses many important issues concerning China’s economic growth, international trade, transparency of trade policy, regional trade arrangements, foreign direct investment, banking sector liberalization, exchange rate reform, agricultural trade and energy demand.

Chapter 9: China’s Grain TRQs: Five Years Since WTO Accession

Zhangyue Zhou and Xia Kang

Subjects: asian studies, asian economics, economics and finance, asian economics, international economics


Zhangyue Zhou and Xia Kang INTRODUCTION In December 2001, China was accepted to the World Trade Organization (WTO). Many anticipated that, following China’s accession to the WTO, its grain imports would increase rapidly. To mitigate the likely strong shock on Chinese grain producers’ income and its grains industry, China was allowed a ‘transition period’ of a few years. During this transition period, China’s grain imports would be managed under a TRQ (tariffrate quota) arrangement. That is, if the imports are within the quota, a lower in-quota tariff will be charged; otherwise, a much higher out-quota tariff applies. The higher above-quota tariff would discourage imports and thus would provide protection to Chinese farmers and its grains industry. Five years have passed since China became a member of the WTO. Then, what has happened to China’s grain trade under the TRQ arrangement? How did China implement the grains TRQ? Were China’s TRQ practices in alignment with WTO rules? Such questions have continuously drawn much interest from grain traders and many international observers. Australia, as a major grain exporter, has also paid much attention to looking for answers to such questions.1 So far, however, little effort has been made to examine China’s grain TRQ implementation and management. This study attempts to fill this gap. In the next section, we first provide an overview over the developments in China’s grain trade and its trade policies in the past five years. This is important because an understanding of China’s grain TRQ practice must be placed...

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