Projecting China’s Grain Demand and Supply

Since the late l970s when China embarked on economic reform, grain has twice become a subject for heated debate both within the policy circle and amongst economists. The first occurred in the late l980s, and the second has been going on since 1994. The timing of these debates is not accidental. Both happened at times when China suffered painfully from high inflation—grain prices soared at 42.8 per cent per year during 1986–87 and 50.7 per cent per year during 1994–95. Although grain prices have often fluctuated, evidence suggests that grain shortages in China are a chronic trend rather than a cyclical phenomenon. Underlying growth in demand has been outpacing domestic supply. How should China fill the growing gap between domestic demand for and supply of grain, and what are the implications of this growing gap for China’s agricultural policy? This chapter does not intend to address these broad issues. Instead, it provides some projections of China’s grain markets. It is hoped that these projections will put the policy debate on an empirically more sophisticated basis.