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United States Department of Agriculture Economic Research Service https://www.ers.usda.gov A 93.44 AGES 9059
United States Department of Interprovincial Agriculture China's
Economic Research Grain Marketing and Service
Agriculture and Trade Import Demand Analysis Division Nicholas R. Lardy
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13284 Lt(Lf I, China's Interprovincial Grain Marketing and Import Demand by Nicholas R. Lardy. Agriculture and Trade Analysis Division, Q, Economic Research Service, U.S. Department of Agriculture. Staff Report No. AGES 9059.
Abstract
(hina has been a major participant in international markets for agricultural commodities for at least a century. This study explores the possibility that China's grain import demand is a function of state policy on interprovincial grain marketing. China's system for the interprovincial transfer of grain appears to have performed very poorly in the first decade of reform. The central government has taken several important steps to reduce its role in the grain market to facilitate grain transfer. However, it remains to be seen if the constraints, such as storage and transport, could be eased sufficiently to increase the level of interprovincial grain transfer.
Keywords: China, international markets, grain marketing, imports, policy
Acknowledgments
A Cooperative Agreement between the U.S. Department of Agriculture, Economic Research Service, Agriculture and Trade Analysis Division, and the Henry M. Jackson School of Inter- national Studies at the University of Washington provided support for the research for this paper. The author received guidance, advice, and comments on this project from Charles Y. Liu, Frederick M. Surls, and Francis C. Tuan. In addition, W. Hunter Colby, Bonita L. Moore, Francis C. Tuan, and Thomas A. McDonald edited the manuscript and Beverly Payton handled electronic word processing.
1301 New York Avenue, NW. Washington, DC 20005-4788 September 1990
iii Contents Page
Introduction • • • 1
The Magnitude of the Interprovincial Grain Market 4 The Transition of 1978-82 ...... • • 6 The Upturn in Interregional Grain Marketing in 1983 • • • 8 The Late 1980's . • • • • . • 9
The Procurement System • . • • • • • • • • • • 10 Changes in the Procurement System in 1985 • • 12
Transfer Pricing . • • • 14
Two Case Studies 21 Guizhou . • • • 21 Jilin . . • • • 23
Persisting Constraints .. • • • . • • • • • 28 Continued Bureaucratic Obstacles . • • • • • • 28 Transport 30 Storage 32 Wholesale Markets . . • • • • • 34 Feed Grain Production • • • • • • • • 34 Residual Preference for Self-Sufficiency 37
Conclusions . . • • 39
Appendix 1: Notes on Interprovincial Grain Transfer Data 41
Appendix 2: Interprovincial Inward Grain Flows, Selected Years 43
Appendix 3: Interprovincial Outward Grain Flows, Selected Years .. 48
List of Chinese-Language Periodical Publications 51
iv s ii t r r Co etin ort
Nicholas R. Lardy
Introduction
China has been a major participant in international markets for agricultural commodities for at least a century. In the second half of the 19th century, China was periodically a major importer of rice from Burmal and a major supplier of tea to the world market.2 By the 1870's, the market for rice in coastal southern China was well integrated with the world market. By the late 1920's and early 1930's, this integration had spread so that domestic rice prices, both in Shanghai and in inland regions in the Yangtze River valley, were linked closely to developments in the international market.3 China's domestic market determined the international price for some commodities, notably soybeans, ,for which China supplied 90 percent of the volume of international trade. Most of this trade in agricultural products was in the hands of private traders, and import and export decisions were made in response to market conditions.
After 1949, links between the domestic market and the international market were largely severed. Domestic prices were controlled by the state and became increasingly divorced from international market conditions. However, China .remained an important participant in international markets. In the 1950's, China exported 1.5-2.5 million metric tons of soybeans annually, supplying 60-70 percent of the world trade volume.4 China in the 1950's was also a major supplier of rice to the international market.
After the massive failure of the Great Leap Forward (1958-60), China became, for the first time under Communist leadership, a large net importer of wheat. China initially bought wheat from Argentina, Australia, and France, but by the 1970's, when the United States and China each opened liaison offices in the other's capital, China began to purchase significant amounts of
1 A.J.H. Latham and Larry Neal, "The International Market in Rice and Wheat, 1868-1914," The Economic History Review, Second Series, Vol. XXXVI, No. 2, May 1983, pp. 261-62.
2 - Dwight H. Perkins, Agricultural Development in China, 1368-1968 (Chicago: Aldine Publishing Company, 1969), pp. 130-33.
3 Loren Brandt, "Chinese Agriculture and the International Economy, 1870-1930s: A Reassessment," Explorations in Economic History, Vol. 22, 1985, pp. 168-93.
4 Tang Mingfeng, "Estimates and Policy Concerning China's Grain Production," Reference Materials on Economic Research, No. 129, 1983, p. 44.
1 wheat from the United States. More recently, particularly in the 1980's, China has been a major supplier of silk, rabbit hair, and hog bristles in international markets. China's agricultural exports contributed about 10 percent of its total export values in the early 1980's.
While China remained a major participant in international markets for grain and soybeans, the character of trade decisions was altered drastically after the Communist Party assumed power in 1949. Beginning in the early 1950's, export and import decisions were the sole responsibility of the Ministry of Foreign Trade. Since the 1950's, the China National Cereals, Oils and Foodstuffs Import-Export Corporation, one of about a dozen state trading companies controlled by the ministry, has carried out all trading in grains and edible vegetable oils.
Very little is known about the import and export decisionmaking process for cereals and other agricultural commodities. Attempts to predict the level of China's wheat imports, using variables such as the level of domestic production, the size of China's population, and the relative prices of various grains, have not been very successful. China has imported sizable quantities of grain not only when domestic grain production declined but also when it remained the same or even increased.5 For example, in the early 1980's as per capita grain production was rising to historic high levels, imports also soared to peak historic levels. Then in 1985 and 1986, when grain production fell below the record high of 1984, China's grain imports fell and exports rose. China actually became a net exporter of grain for the first time since the 1950's. In short, imports are not simply a safety valve for meeting shortfalls in domestic production.
At least three additional hypotheses have commonly been taken into account in analysis of China's international trade in cereals. First, and probably most important, is China's grain procurement system. Imports are motivated not by a shortfall between total domestic production and aggregate demand, but by the relationship between the supplies of grain available to the Government and the commitments of the state to supply grain. The state has been prepared to see substantial changes over time in the level of per capita grain consumption in the rural population, but has been committed, since the mid-1950's, to supply fixed amounts of cereals to members of the nonagricultural population, most of whom are permanent urban residents.° In addition, the state, until recently, assumed the responsibility of supplying grain for the food processing and feed industries. These demands are being met with grain procured from the peasants, and to varying degrees, with grain imported from abroad. In short, the state's focus has been not on the
5 U. S. Department of Agriculture, Economic Research Service, The Agricultural Situation in the People's Republic of China and the Asian Communist Countries, 1974, p. 21. John Wong, "China's Wheat Import Program," Food Policy, May 1980, pp. 117-31.
6 Ralph Heunemann, "Urban Rationing in Communist China," The China Quarterly, No. 26, April-June 1966, pp. 44-57.
2 aggregate demand and supply for grains but only on that subset of demands that it was committed to meet and the subset of supplies available through the procurement system. Changes in the levels of state-controlled grain stocks and changes in the level of grain imports have handled imbalances between this subset of demands and supplies.
A second, closely related hypothesis explaining China's grain imports focuses on transport capacity and costs. A substantial share of the demand for grain that the state is committed to meeting arises from major urban centers located on or near the coast. If domestic transport costs between hinterland regions of surplus grain production and these urban centers are high enough or if traffic congestion on rail and other domestic transport systems is severe, it may make economic sense to import grain from abroad to feed major coastal cities, even if the Government could easily procure additional cereal supplies from distant domestic regions.
A third hypothesis, advanced to explain levels of grain imports, is the relative price of rice and wheat. China traditionally has been a significant rice exporter. Exports have been about 1 million tons per year since 1949. While this is not a very large amount, it is a relatively large share of world trade in rice, which is rather thinly traded compared with wheat and coarse grains, like corn. An international price differential in favor of rice allows and, in some cases, increases China's imports of wheat because China maintains the volume of rice exports to take advantage of its terms of trade. Because rice prices have been higher than those for wheat, the price differential also increases China's net grain trade.
The purpose of this paper is to explore the possibility that China's grain import demand, in addition to the factors mentioned above, is also a function of state policy on interprovincial grain marketing. This approach differs from the second hypothesis in its focus on marketing policy rather than on physical constraints or transport costs. In short, if domestic production develops in a regionally differentiated manner, and state policy restricts the movement of grain internally, imports may become a substitute for domestic grain, even in the absence of a shortfall in aggregate domestic production. Or, exports could occur despite a continued shortfall in aggregate domestic supply. The latter possibility was recognized specifically by China's agricultural specialists in an article published in mid-1985, just as China was becoming a net grain exporter for the first time in two and a half decades. These specialists argued that China could not rely on agricultural exports to earn foreign exchange and pointed out that grain exports were possible only because of a temporary and fragile regional surplus that arose from a blockage of internal distribution channels.7
7 Chen Jian, Liu Yunzhou, and Gao Hongbing, "A Brief Discussion of Some Problems of the Role of Agricultural Products in the Expansion of China's Foreign Trade," Problems of Agricultural Economics, No. 8, 1985, p. 43.
3 The Magnitude of the Interprovincial Grain Market
The interprovincial redistribution of grain in the 1950's was intended to raise grain consumption levels in provinces with either chronically low output levels or transitory grain harvest shortfalls that depressed the volume of provincially procured grain below the level of government sales commitments. Examples of the former, in addition to the independent municipalities of Beijing, Tianjin, and Shanghai, included Liaoning where, despite a relatively high level of grain output per rural resident, a high rate of urbanization required sustained grain inflows equivalent to about a fourth of provincial production. An example of the latter would be the large blip in 1954 in grain transfers into Anhui, a province that, on balance, was a slight net grain exporter in the First Five-Year Plan (1953-57). Food grain production in Anhui in 1954 fell more than 1 million tons, or about 15 percent, because of widespread natural disasters.
In some cases the chronic shortfall in cereal supplies resulted from provincial specialization in nongrain crops. Provinces such as Hebei and Shandong on the North China Plain were major producers of peanuts and cotton. Without external food supplies they would have been unable to exercise their comparative advantage in these crops.
The average annual level of interprovincial grain transfers during the First Five-Year Plan (1953-57) is shown in table 1. Transfers averaged 7.6 million metric tons per year, or 5 percent of domestic production. China's data on outward transfers do not distinguish between grain bound for domestic and international markets. But net grain exports to international markets (measured in terms of trade grain) averaged 1.65 million tons, leaving about 6 million tons of redistributed grain to meet domestic needs. Thus, the level of interprovincial grain mobility appears to have been higher in the 1950's than in the pre-war period of 1930-36, when interprovincial exports averaged about 2 percent of domestic production. This suggests that the imposition of government control of the interprovincial grain market did not inhibit trade flows compared with the market-oriented system that prevailed in China prior to the Japanese invasion.8
However, there was clearly a policy of very modest interprovincial grain transfers during the Cultural Revolution, 1966-76. Transfers during this period appear to have averaged no more than about 1 percent of domestic production, down substantially from the 1950's, when transfers made up 5 percent of domestic output. This reflects the central government's policy of imposing provincial and local self-reliance by curtailing the interregional movement of domestic grain.
8 Nicholas R. Lardy, Agriculture in China's Modern Economic Development (Cambridge: Cambridge University Press, 1983), pp. 46, 229.
4 Table 1--Interprovincial grain transfers in the People's Republic of China, 1953-831
1 Year Transfers Production Transfers' share of production
Millions of Millions of metric tons metric tons Percent
1953 7.85 143.5 5.5 1953-57 average 7.60 150.7 5.0
1960 7.04 119.5 5.9 1965 4.70 168.1 2.8
1978 2.05 262.1 .8 1979 3.125 285.6 1.1 1976-80 average 2.95 253.4 1.1
1981 1.336 269.8 .5 1982 1.60 293.3 .5 1983 >15.0 337.8 >4.4
1 Transfers are shipments outward (diaoqu) of domestically produced cereals measured in terms of trade grain (mao-yi hang). Trade grain includes rice and millet in processed form, but other grains, including tubers at grain-equivalent weight, and soybeans and other legumes in unprocessed form. The production data are also measured in trade grain terms by applying the factor 0.83 to the official output data reported in original weight (yuan hang).
Sources:
1953 and 1979: Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 4, 1981, p. 56. The same data are repeated in Hu Yunlong and You Qianzhi, "The Price of Grain Should be Fixed on the Basis of Inferior Production Conditions," Price Monthly, No. 3, 1985, reprinted in Agricultural Economics, No. 9, 1985, p. 118.
1953-57, 1976-80, and 1981: Tang Mingfeng, "Estimates and Policy Concerning China's Grain Production," Reference Materials on Economic Research, No. 129, 1983, p. 33-4. Tang's figure for 1953-57 is consistent with an earlier study reporting that provincial outward transfers in 1953-56 averaged between 7 and 7.5 million metric tons annually: Zhu Jingzhi, China's Grain Policy and the Work to Supply Grain to Cities and Towns (Peking: Finance and Economics Publishing House, 1958), p. 252.
1960: China's Current Grain Work (Beijing: Chinese Social Science Publishing House, 1988), p. 262.
1965 and 1978: Lin Gang, "China's Agricultural Backwardness Is The Root Cause of Its Rapid Population Growth," Population Research, No. 1, 1981, p. 22.
1982 and 1983: Ding Shengjun, "The Reform of China's System of Procurement and Sale of Commodity Grain," Economic Research, No. 8, 1984, p. 26; Dai Linsheng and Dong Heping, "Grain Work Must Have a Sales Viewpoint," Economics of Finance and TrOe, No. 4, 1985, p. 51. The same 1982 figure is also given in China's Current Grain Work (Beijing: Chinese Social Science Publishing House, 1988), p. 206. That source says that, in 1983, the supply of grain for transfer from surplus to deficit provinces was greater than 23.5 million metric tons, but that the deficit provinces required only somewhat more than 6.5 million metric tons. The amount actually transferred out was not stated.
Column 2: State Statistical Bureau, Chinese Statistical Yearbook 1985 (in Chinese), p. 255.
Column 3: Column 1 divided by column 2.
5 The Transition of 1978-82
Because of agricultural reforms, interprovincial marketing of cereals in China has increased dramatically since 1983. That increase appears to reflect at least three factors. First, the state appears to have made more than the traditional efforts to meet subsistence consumption needs of China's poorest rural residents. Some of these needs are being met from cereals produced outside the provinces where these low-income peasants live. For example, inflows into Gansu, an impoverished province in the northwest, rose sharply in the late 1970's and early 1980's (Appendix 1). Second, the state reduced its stringent policy of local self-sufficiency and encouraged marketing of cereals, both locally and interregionally, to facilitate specialized production of both grain and nongrain crops. That change was particularly evident in the reemergence of a strategy first developed in the early 1960's: the building up of commodity grain bases. Finally, the state has facilitated increased interprovincial marketing in a series of institutional reforms, ranging from allowing long-distance private marketing in cereals to pricing reform of grain moving interprovincially.
While these changes are cumulatively impressive, they were instituted only haltingly, and the grain market continues to be inhibited by various aspects of state policy. Data on interprovincial marketing unfortunately remain relatively scarce, so it is difficult to judge the recent results of the reforms undertaken. But there is substantial evidence that the extent of grain marketing remains relatively low, particularly for an environment where per capita production levels have risen substantially above the level of the 1950's.
The interprovincial export of cereals remained relatively low in the first few years of the rural reforms (see table 1). Flows were about 1 percent or less of total production in 1979, 1981, and 1982, the years for which data are available. This is somewhat surprising, given the data showing the regions of food grain surplus and deficit in 1981-83 (table 2). Despite the fact that China's grain production was increasing at a record pace between 1978 and 1983, there were still regions of substantial food-grain deficit (table 2). It is important to recognize that these regions have been identified as surplus or deficit, not by comparing desired and actual levels of food consumption by all persons in the defined region, but by measuring the difference between state purchases and state sales within each region. That means that huge differentials remain in the levels of per capita consumption in rural China, differentials that are at least of the magnitude shown in the first column of table 2.
The low levels of interprovincial grain exports in 1980-82 probably are related to a decision of the Chinese Communist party in the late 1970's to increase grain imports substantially over the level of the Cultural Revolution years.9 After this
9 Wu Xiang and Lu Wencliang, "Different Perspectives on the Grain Problem," Problems of Agricultural Economics, No. 1, 1986, p. 16.
6 Table 2--China's grain surplus and deficit regions, 1981-83
Per capita Surplus (shortage)1 Region production Total Wheat Rice Soybeans Corn
Kilograms Million metric tons
China 345 3.0 (7.3) 6.21 0.32 0.3 North9ast2 404 2.8 (3.0) .21 .44 .2 NortV' 303 (5.0) (3.7) (.8) 0 (.5) East 383 4.9 2.0 1.7 .4 .2 t 5 Middlg and Lower Yang ze 395 2.0 (1.2) 4.3 (.3) (.8) South' 317 (1.2) (1.5) .5 (.1) (.1) Southwest7 327 .4 .4 .6 (.1) (.5) Northwest8 284 (.8) (.3) (.2) 0 (.2)
1 The difference between grain procured and sold by the state. 2 Liaoning, Jilin, and Heilongjiang. 3 Beijing, Tianjin, Hebei, Shanxi, Shandong, and Inner Mongolia. 4 Henan, Anhui, and Jiangsu 5 Hubei Hunan, Jiangxi, Zhejiang, and Shanghai. 6 Fujian, Guangdong, Guangxi, and Jiangxi. 7 Sichuan, Yunnan, Guizhou, and Tibet. 8 Shaanxi, Gansu, Ningxia, Qinghai, and Xinjiang.
Source: Kuang Chanjuan and Xue Zhishi, "A Suggestion for Readjusting Commercial Crop Distribution and Commodity Grain Bases," Agricultural Technical Economics, No. 5, 1985, p. 13.
decision was taken in 1978, import levels began to rise sharply, despite the large increases in domestic production (table 3). By 1982, net imports reached an all-time record. In 1981 and 1982, most of the regional grain shortfalls shown in table 2 were probably met by imports rather than domestic sources. At that time, only 1-2 million metric tons of grain was being transferred out of China's surplus grain-producing provinces, and at least half of this was rice and soybeans destined for international markets." By comparison, regional shortfalls averaged more than 9.7 million metric tons for wheat and more than 2 million metric tons for corn (see table 2).
Because these shortfalls are calculated on a regional basis, they are a lower bound estimate of the need for interprovincial transfers. Thus, in 1981 and 1982, wheat imports averaging 13.3 million tons and corn imports averaging 1.2 million tons must have satisfied most of the regional shortfalls." In short, imports were used in the early 1980's both to relieve procurement demands on the peasantry and to facilitate a restructuring of agricultural production. Increased supplies of grain contributed to the substantial expansion in the area sown to cotton, edible
10 Data on outward transfers of grain are inclusive of grain bound for international as well as domestic markets. See discussion in Appendix 2.
11 Ministry of Foreign Economic Relations and Trade, Almanac of China's Foreign Economic Relations and Trade 1984, p. 944.
7 Table 3--China's international grain trade, 1977-871
Year Total imports Total exports Net imports
Million metric tons
1977 7.34 1.76 5.58 1978 8.83 1.88 6.95 1979 12.35 1.65 10.70 1980 13.42 1.61 11.81 1981 13.83 .99 12.84 1982 16.15 .81 15.34 1983 13.53 1.15 12.38 1984 10.41 3.19 7.22 1985 6.00 9.32 (3.32) 1986 7.73 9.42 (1.69) 1987 16.28 7.37 8.91
1 Data for years 1977-80 were released by the Ministry of Foreign Trade. Data for 1981 and subsequently years were released by China's Customs Bureau. For 1981-83, for which both agencies have released data, the customs data on imports range from 100,000 tons greater to 980,000 tons less than those of the ministry. The customs export data for the same years are less than the ministry data in all years by an amount ranging from 270,000 tons to 810,000 tons. The causes of these differences are not clear. In any case, the pattern of sharply rising net imports in the early 1980's is reflected in the data from both agencies.
Sources: State Statistical Bureau, Chinese Statistical Yearbook 1981 (in Chinese), pp. 368, 384, 390, and 392; Chinese Statistical Yearbook 1984 (in Chinese), pp. 388 and 393; Statistical Yearbook of China 1986, pp. 487 and 490; Chinese Statistical Yearbook 1987 (in Chinese), pp. 597 and 600; and Chinese Statistical Yearbook 1988 (in Chinese), pp. 727 and 730.
vegetable oils, sugarcane, and other grain crops that had been squeezed out during the Cultural Revolution years.12
The Upturn in Interregional Grain Marketing in 1983
A dramatic increase in interregional marketing of grain occurred in China during 1983, when more than 15 million metric tons were transferred out of 18 provinces with surplus grain production. The dramatic upturn in interregional grain exports appears to be due to two factors. First, the central government instituted a policy regarding the procurement of cereals, agreeing to purchase all of the surplus grain offered for sale at the over-quota price and to pay provincial and local procurement agencies for the differential cost of the over-quota purchase price as well as the associated storage and handling costs. Moreover, whatever grain could not be used locally would be transferred to the central government. If, because of limits on transport capacity, the grain could not be shipped, the central government agreed to provide additional appropriations for subsequent storage costs.
That policy drastically changed the prevailing situation, in which the provincial level procurement agencies in grain surplus
12Zhang Tong, "A War Strategy for Solving China's Grain Problem," Reference Materials on Economic Research, No. 33, 1983, p. 3.
8 regions were unwilling to increase purchases because of the lack of a market for the grain and the additional costs associated with the higher levels of procurement. The total level of procurement thus rose by 24.4 million metric tons, more than 30 percent, which was more than the cumulative procurement increase in the previous 4 years.13 The increase in interprovincial transfers in 1983, shown in table 1, was more than half of incremental procurement.
The second reason for the marked increase in interprovincial grain flows was the changed policy on private grain marketing. When rural grain markets were reopened in the late 1970's, they were subject to numerous restrictions. Peasants were supposed to sell only their own output, not to act as middlemen, and the allowed means of transport were limited to what could be carried by hand, shoulder pole, or bicycle.14 These regulations were gradually relaxed. As noted above, individual peasants as well as cooperative units in any county were allowed to move grain out of the county beginning in 1982, and even out of the province once peasants in the county had fulfilled the targets for quota and over-quota delivery of grain to the state. In 1983, the Central Committee's Number 1 Document on agriculture further relaxed the restrictions. First, the policy authorized private long-distance transport without regard to routes or total distance. Peasants had only to register and pay appropriate taxes. Second, the policy allowed mechanized transport.15 Peasants, either individually or in voluntary cooperatives, could use motorized and walking tractors, as well as trucks for private hauling, and could sell on both retail and wholesale markets.
Closely related to the emergence of private long-distance hauling was the reemergence of traditional wholesale markets for agricultural products, including grain. By 1983, wholesale markets had begun to reemerge. There were 60 such markets in Liaoning Province, 9 in Chongqing Municipality, and 10 in Guangzhou.16 Wholesale markets specializing in grain reappeared during 1983-85 at traditional grain transshipment points, such as Wuxi, Jiangsu Province; Wuhu, Anhui Province; Jiujiang, Jiangxi Province; and Shashi, Hubei Province. Surveys show that most of the buyers and sellers in these wholesale markets are involved in transport rather than production.
The Late 1980's
Data on interprovincial exports unfortunately have not been located for the years after 1983. Tang Mingfeng, an official in the Policy Research Office of the Ministry of Agriculture, wrote
13 State Statistical Bureau, Chinese Statistical Yearbook 1987, P. 568.
14 Yan Jinye, "Changes in China's Market Trade," Chinese Economic Yearbook 1983, p. IV-129.
15 Duan Yingbi, "The Policy of Gradually Reforming the System of Procurement of Agricultural and Subsidiary Products," Chinese Agricultural Yearbook 1985, p. 52.
16 Yan Jingye, "The New Transformation in China's Market Trade," Chinese Economic Yearbook 1984, p. V-195.
9 in a 1983 article that the expected demand for grain transferred by the central government during 1983-85 would average 21.5 million metric tons per year. He expected that the state would import 12.5 million metric tons, with the rest of the needed grain to be acquired from domestic sources.17 The actual 1983 provincial grain outflow level of more than 15 million metric tons substantially exceeded Tang's implied goal of 9 million metric tons.
But after the mid-1980's, when grain production stagnated for several years, the amount of domestically produced grain that moved interregionally appears to have fallen sharply. As per capita grain production shrank, and market prices rose to a higher multiple of the state procurement price, both local governments, and by 1988 even the central government, increasingly intervened in the market for grain. These steps, and others described below, undoubtedly reduced interregional flows.
One indication that the amount of grain flowing interprovincially shrank after 1983 is that the number of grain surplus provinces with net exports in 1985 was only 4, down substantially from 18 in 1983.18 Moreover, the total amount of grain flowing into provinces that were net grain importers in 1988 dropped to about 15 million metric tons.19 If, as hypothesized in Appendix 2, these inflow data are inclusive of grain imported from the world market, that suggests that transfers of domestic grain in 1988 were down significantly from 1983 and 1984.20
The Procurement System
The market for grain in China is unique. For no other consumer good has the state sought to exercise such far-reaching control of both purchases and sales. The institutional arrangements for the transfer of grain interregionally has been part of the broader system of grain management that was instituted in the 1950's.
The system of unified central control of purchases, sales, interprovincial transfers, and storage, referred to as the "four unifieds" (si tongyi), was instituted by a series of four Central
17 Tang Mingfeng, "Estimates and Policy Concerning China's Grain Production," Reference Materials on Economic Research, No. 129, 1983, P. 34.
18 - Wei Yulln and Gao Laisheng, "Reflection's on Shanxi's Grain Problem," Economic Problems, No. 1, 1987, p. 16.
19 Chen Housheng, "Mobilize All Strengths; Earnestly Strengthen Agriculture," People's Daily, Mar. 26, 1989.
20 Official data show Chinese wheat imports in 1988 were 13.5 million metric tons and rice exports were under 1 million tons. China Statistics Monthly, Mar. 1989, pp. 102-4. This source does not provide data on trade in soybeans and corn. But making order of magnitude allowances for those commodities, China's net grain imports were probably around 12 million metric tons. Thus, 75-80 percent of the inflows of grain to deficit provinces were of imported grain, and outflows of grain from surplus provinces to deficit regions were probably well under 3 million tons.
10 Committee decisions and directives issued by the Chinese Communist Party in 1953 and 1955.21 The salient features of that system survived with only minor modifications for three decades. Even today, many of the system's key features endure despite the reforms instituted in 1985 that nominally replaced the system of unified procurement with a contract system. Because of the importance of grain and the longevity of this centrally controlled system, many studies describe and analyze the procurement system.22
The procurement system initiated in the fall of 1953 sought to establish the state's monopoly power over the purchase and sale of grains. Private marketing of grain was restricted and private grain millers were no longer allowed to buy and sell grain on their own account. In addition to curtailing private marketing, specific delivery targets were established by region, and later for each agricultural producer's cooperative, for which the state fixed payment at a below-market price. As these procurements grew over time, the implicit tax entailed in the below-market price for procurement deliveries to the state exceeded in value the size of the direct agricultural tax. The latter was not adjusted upward.
Finally, the state took over the dominant role in the sale of grain. The mechanisms included a system of coupon rationing for determining the flows of grain to members of the permanent urban population and a system of supplying grain in rural areas both to producers of nongrain crops and in regions where natural disasters temporarily depressed grain output.
The system of procurement became somewhat more complex over time. In the early 1960's, the state introduced a system of over-quota purchases, for which a premium over the basic procurement price was paid. This was a mechanism the state used to reduce the burden associated with rising procurement targets. But because only part of the higher targets was designated as "over-quota," the financial costs to the state were lower than simply paying the higher price across the board. Also in the 1960's, various types of incentive sales were introduced, under which sale of grain to the state was awarded by providing entitlements to purchase scarce industrial and consumer goods, such as chemical fertilizer, cotton cloth, and soap.23
As the costs of procurement rose over time, while the prices for the sale of rationed grain to the permanent urban population
21 He Jinming, Handbook for Economic Work (Xian: Shaanxi People's Publishing House, 1984), P. 330.
22 The most comprehensive is Kenneth R. Walker, Food Grain Procurement and Consumption in China (Cambridge: Cambridge University Press, 1984). See also Nicholas R. Lardy, Agriculture in China's Modern Economic Development (Cambridge: Cambridge University Press, 1983); "Economic Recovery and the First Five-Year Plan," The Cambridge History of China Volume 14 The People's Republic, Part I: The Emergence of Revolutionary China, 1949-1965, edited by Roderick MacFarquhar and John K. Fairbank (Cambridge: Cambridge University Press, 1987). Terry Sicular, "Grain Pricing: A Key Link in Chinese Economic Policy," Modern China, Vol. 14, No. 4, Oct. 1988, pp. 451-86.
23 Terry Sicular, "Grain Pricing: A Key Link in Chinese Economic Policy," Modern China, Vol 14, No. 4, Oct. 1988, pp. 460-64.
11 remained unchanged, the system entailed growing financial losses. By the mid-1960's, the losses exceeded 1 billion yuan per year.24 The losses rose to more than 3.5 billion yuan by 1978, 18.3 billion yuan in 1983, and about 24 billion yuan in 1985.25
As a consequence of this highly bureaucratic marketing system and the relatively slow long-term growth of grain output, the marketing of grain remained relatively underdeveloped prior to the onset of rural reforms in the late 1970's. Government- procured grain declined as a share of total grain output between the end of the first plan and the eve of agrarian reforms in the late 1970's. Procurement totaled 48 million tons, 24.6 percent of output in 1957, but by 1977, at 58.25 million metric tons was only 20.3 percent of output.26
Rural reforms rapidly increased the rate of marketing even as output surged as a result of the rural reforms. By 1984, the quantity of grain sold to the state had risen to 141.69 million metric tons/ or 34.8 percent of total production, a record-high proportion.47 In private markets, peasants sold an additional 4.75 million metric tons of grain to urban households.28
Changes in the Procurement System in 1985
In response to numerous structural problems, the procurement system in 1985 underwent its most dramatic overhaul since its establishment in the fall of 1953. That overhaul appears to have had several major objectives. First, and perhaps most important, it represented an attempt to place a firm cap on the price that the state pays for grain. Because the share of grain purchased at the higher above-quota price rose significantly between 1978 and 1983, the average cost of procured grain rose dramatically. In 1978, only 34.5 percent of all grain was purchased at the above-quota premium. By 1983, that share had risen to 72.4 percent.29 As a result of the 20-percent quota price increase instituted in 1978, the simultaneous increase in the over-quota premium from 30 percent of the quota price to 50 percent of the quota price, and the higher share purchased at the over-quota price, the average cost of procurement rose by fully 50 percent between 1977 and 1983.3°
24 Sicular, "Grain Pricing: A Key Link in Chinese Economic Policy," Modern China, Vol. 14, No. 4, Oct. 1988, p. 447.
25 Nicholas R. Lardy, "Dilemmas in the Pattern of Resource Allocation in China, 1978-1985," Remaking the Economic Institutions of Socialism: China and Eastern Europe, Victor Nee and David Stark, eds. (Stanford, CA: Stanford Univ. Press, 1989), table 6.
26 State Statistical Bureau, Chinese Statistical Yearbook 1983, P. 393. 27 State Statistical Bureau, Chinese Statistical Yearbook 1987, p. 570.
28 State Statistical Bureau, Statistical Yearbook of China 1986, (in English), p. 471.
29 - • Jl Cal, "How to Change Grain Subsidies," Economics of Finance and Trade, No. 12, 1984, p. 49.
30 The average price paid by the state for grain in 1977 was 256.6 yuan per metric ton. By 1983 it was 392.6 yuan, an increase of 53 percent. State Statistical Bureau, Chinese Statistical Yearbook 1985,- p. 547.
12 While the price of grain purchased rose steadily, the price the state charged for grain sold to the permanent urban population was fixed by policy. Because of the rising cost to the state of procuring grain after 1978, the subsidies the State had to provide to cover the losses on the retail sale of rationed grain rose from 4.03 billion yuan in 1978 to 18.05 billion yuan in 1983.31
Similarly, the state had to provide substantial subsidies to cover the losses incurred on its provision of commodity grain to producers of cotton, animal husbandry, and other noncereal crops. The state, as part of its policy reviving specialized production of noncereal crops, undertook to make cereal crops available through a system of tied sales. The total volume of such sales more than tripled the 1978 level of 4.1 million metric tons, reaching 12.75 million metric tons in 1883. Because the marginal cost to the state of purchasing this grain was at least the over-quota price, this program also entailed substantial financial subsidies while the sales were tied to the quota price. Subsidies on these incentive sales were 410 million yuan in 1978, but rose to 1.79 billion yuan in 1983.32
Because specialized production of noncereal crops was rarely complete, producers of commercial crops in many areas also sold grain to the state. These producers were frequently able to profit from reselling, at the over-quota price, grain they had purchased under the incentive program at the quota price.
The new procurement system has several features that sought to reduce future financial losses or to reduce losses in absolute terms. First, the system of multiple-price procurement was replaced with a single-procurement price, referred to as the contract price, effectively ending the escalation of the average price due to the rising share of over-quota sales. The contract price was a weighted average of the former quota and over-quota prices with the weights of 0.3 and 0.7.
Second, the quantity of procurement was curtailed substantially. The state eliminated procurement of miscellaneous grains, limiting state procurement at fixed prices to rice, wheat, corn, and in six major producing regions, soybeans. The planned level of contractual purchases for the 1985 procurement year (April 1985-March 1986) was 75 million metric tons, less than three quarters the amount purchased in 1983.
Third, the state required most peasants to pay agricultural taxes in cash rather than in kind, a policy change anticipated to reduce grain delivered to the state by about 10 million metric tons. Obviously, the state had to make corresponding reductions in its commitment to supply grain to accommodate the reduction in the amount of grain it took in. In part, the adjustment process depended on reducing the additions to stocks, and over a period
31 Ji Cai, "How to Change Grain Subsidies," Economics of Finance and Trade, No. 12, 1984, p. 49.
32 Ji Cai, "How to Change Grain Subsidies," Economics of Finance and Trade, No. 12, 1984, p. 49.
13 of several years, partly meeting commitments by drawing down stocks. But part of the adjustment was made immediately by reducing the state's commitment to supply grain. In 1985, for example, the state eliminated its commitment to supply cereal at favorable prices to farmers selling cotton, tobacco, hemp, other commercial crops, and pigs to the state. Beginning in 1985 peasants producing these commodities had to purchase grains above their own production either on rural markets or from the state at the negotiated price. With the exception of producers selling sugarcane or sugar beets, preferred access to grain at the quota price was cut off. Also beginning in 1985, state industrial enterprises, producing ethyl alcohol, solvents, pharmaceuticals, monosodium glutamate, starch, and other products for which grains are an input, were required to purchase their cereals at the negotiated price, reducing the quantity the state was required to sell at a subsidized price.33
Transfer Pricing
China's agricultural pricing system includes a specific transfer price (diaobo jiage) for grain in addition to several procurement prices (quota, above-quota, and contract prices), a quasi-market price (negotiated price), and a market price. The transfer price mechanism has imposed a substantial constraint on interregional transfers, although reforms in the mid-1980's alleviated some of the disincentives for outward transfers.
Since the early 1960's, the transfer price has been based on the quota procurement price plus a small administrative fee to cover some of the costs associated with grain transfers.34 Tying the transfer price to the quota price creates a substantial disadvantage for regions of surplus grain production. As discussed earlier under the evolution of the procurement system, the government purchased grain within a complex multitiered structure. The marginal, or over-quota, price was set substantially above the basic quota procurement price to provide an incentive for increased deliveries. But this system imposed significant financial costs for the surplus grain region. At the margin, the local government grain bureau paid a relatively high price to procure grain, but received a lower price based on the quota price for the grain' transferred out of the province.
33 This system of low-priced sales of grain to producers of certain nongrain crops and animal husbandry products was referred to as "encouragement sales" (jiang shou). Ding Shenjun of the Economic Research Institute of the Ministry of Commerce first advanced this proposal in 1984. "Reform of China's Grain Procurement and Sales System," Economic Research, No. 8, 1984, p. 28. Two subsequent articles by Liu Yunqian say the proposal was instituted in 1985. "A Discussion of the 'Dual Track System' for Grain Prices and Circulation," Problems of Agricultural Economics, No. 6, 1987, p. 23; "China's Grain Commerce," Chinese Economic Yearbook 1986, p. VI-217.
34 Commodity Prices (Beijing: Chinese Finance and Economics Publishing House, 1980), p. 131, states that the method for determining the transfer price is to add the producing region's commercial department circulation expenses, profits, and taxes to the procurement price (shougou jiage) in the producing region. a See China's Current Grain Work (Beijing: Chinese Social Science Publishing House, 1988), pp. 265-66, for discussion of transfer pricing for grain in the 1950's.
14 As a result, surplus provinces incurred considerable financial losses on their sales to other provinces. In 1979, for example, Heilongjiang transferred 500,000 tons of grain to other regions, but the difference between the procurement price paid by the Provincial Grain Bureau and the transfer price received from the central government was 57 yuan per ton. The central government provided a special subsidy of 27 yuan per ton, leaving the province responsible for absorbing losses of 30 yuan per ton shipped out of the province, or a total loss of 15 million yuan.35
The relatively low price paid for grain transferred between provinces may not only undermine longrun production incentives in surplus regions, but are the subject of continuous negotiations between surplus provinces and the central government. An author writing on the case of Heilongjiang, for example, argued explicitly that the relatively low prices the province receives for grain, timber, coal, and crude oil shipped to other provinces, compared with the high prices they pay for goods received from other provinces, constitutes a substantial financial burden inimical to Heilongjiang's economic development. 36
One reason provincial governments may complain so vigorously about the implicit taxation that these transfers entail is that they, in turn, have difficulties obtaining these commodities from their subordinate counties. In Fujian Province, for example, counties with surplus grain to sell within the province have argued strongly that they should be paid substantially more than the contract price the state normally pays for grain because the counties within the province that receive this grain can earn substantially higher incomes from raising nongrain crops. In 1987, the provincial government paid a special subsidy of 60 yuan per ton of grain to each county able to supply a ton or more of grain that could be shipped out of the producing county. But the grain-producing counties also demanded and received a substantial additional subsidy for within-plan transfers that was paid by the receiving counties. In 1986, this transfer subsidy (diaobo butie) was 374 yuan per ton, and grain-producing peasants insisted that it be raised to 400 yuan per ton or more.37
35 Ma Hong and Sun Shangqing, Research on Problems in China's Economic Structure (Beijing: People's Publishing House, 1981), pp. 680-681. Note that although the authors do not specify how they calculated the losses Heilongjiang incurred in transferring grain to other provinces, it appears that the calculation was based on the average cost of procurement in the province, not the marginal above-quota price. This is because the central government separately and directly subsidizes provinces for expenditures for the differential price associated with above-quota procurement of grain and edible vegetable oils. If that subsidy was equal to the full differential price, and if the transfer price was based on the quota price, in principle, exports to other provinces should have entailed no loss. Yet, numerous sources state that such loss on transfers discouraged the surplus provinces from supplying more grain. For Heilongjiang, the net losses of 30 yuan per ton were equal to 15 percent of the average quota grain procurement price in the early 1980's.
36 Xue Changrong, "Price Reform and the Development of Regional Economic Advantage," Price Theory and Practice, No. 4, 1986, p. 25. Diao Xinshen, "The Task of Reform in Shaping the Market," Economic Research, No. 8, 1986, pp. 43-44.
37 Wang Zhiqin and Wang Yang, "The Root Cause and Solution to Fujian's Gfain Problem," Fujian Forum, No. 7, 1986, p. 44.
15 While the transfer price provided surplus provinces with inadequate incentives to supply grain for outward transfer, deficit regions received cereals from other provinces on such favorable terms that excess demand for inward transfers developed. Provinces receiving cereal from extra-provincial sources paid only the transfer price, and the central government absorbed all of the costs of transporting grain from the surplus regions. Since grain acquired from extra-provincial sources at a price tied to the quota price was cheaper than grain procured locally at the marginal (over-quota) price, provinces with a deficit in grain to feed their urban population and meet other demands for state-distributed grain preferred to maximize the grain received through centrally sponsored transfers.38
The central government has taken several steps since the early 1980's to deal with the problems arising from pricing of interprovincial grain transfers. Beginning in 1982, the central government introduced the contract system for grain procurement, sales, and interprovincial transfers.39 Through this system, the state sought to establish, for a period of 3 years, fixed targets for the procurement and sale of grain in each province except Xinjiang and Tibet. For regions for which state obligations for the sale of grain exceeded targeted local purchases, the state also fixed a quantity of inward transfers. The state absorbed the losses associated with these transfers. While providing some grain transfers to meet local needs in deficit regions, the state sought to limit the financial burden by holding provinces responsible for any inward transfers above the planned amount that might result from poor harvests due to bad weather. While the state might absorb the cost of additional inward transfers in 1 year, absorbing the cost would have to be offset by reduced centrally sponsored transfers in a subsequent year so that the cumulative 3-year target would not be exceeded.
The 1982 reform also sought, through two mechanisms, to allow a greater role for grain purchased at the negotiated price in interprovincial grain transactions. That effort was part of a general policy of using negotiated price purchases and sales to supplement state control of grain at fixed prices. First, supply and marketing cooperatives, other rural cooperative organiza- tions, and individual peasant producers could sell or buy grain outside their own counties and provinces once the peasants in the county had fulfilled the county's target for the delivery of quota and over-quota grain. The previous requirements that such transfers always required approval of the Provincial Grain Bureau and could be limited in quantity were abolished. Second, the
38 Wu Xiang and Lu Wencliang, "Different Perspectives on the Grain Problem," Problems of Agricultural Economics, No. 1, 1986, p. 18. Guo Yuhuai, "Several Opinions on the Grain Problem," People's Daily, May 18, 1987 in Foreign Broadcast Information Service, Daily Report-China, June 2, 1987, p. K24.
39 Liang Ji, "Grain Distribution and Management in China," Almanac of China's Economy 1983, pp. 489-91; "State Council Imposes Grain Control Method 'Grain Purchases, Sales and Transfer Quotas Fixed for Three Years' (Jan. 13, 1982)," Almanac of China's Economy 1983, pp. 836-38. The Chinese text appears in People's Republic of China State Council Bulletin 1982, No. 21 (published Feb. 12, 1983), pp. 1008-11.2
16 regulations provided for official provincial outward transfers of grain above the guarantee amount. Consultations between the provincial government and the Grain Bureau, Ministry of Commerce were to decide the quantity and variety of negotiated-price grains to be transferred annually. Most important, the price at which these transfers would occur was also decided through negotiation.
The freedom of supply and marketing cooperatives and other units in surplus regions to sell grain at negotiated prices dramatically increased the incentives for such sales, even to the point of open competition among surplus regions. When a large grain surplus emerged in Henan in 1984, the provincial governor informed other provinces that they should send their purchasing agents to Henan to buy grain, assuring them of good service and promising lower prices than in the past.4° Private individuals were also active in these markets. In Heilongjiang, for example, a newly established family-operated grain warehouse in 1984 brought in 50-100 tons of negotiated-price rice from Anhui Province, which they resold on the local market in Lindian County.0 While these reforms facilitated the movement of negotiated price grain between provinces, they did little to diminish the complaint by exporting provinces that they received too little for their surplus output.
Partly to alleviate these problems, the state council in 1985 introduced several reforms designed to stimulate interprovincial grain flows. First, the transfer price paid to surplus provinces transferring grain to other provinces was adjusted upward in line with the new uniform contract price.42 Furthermore, the administrative fee, which forms part of the transfer price paid to regions with surplus grain production, was increased in mid-1985 to reduce the financial losses incurred by exporting regions.° Both of these price adjustments should have increased the willingness of surplus regions to transfer out grain. Second, under newly introduced regulations, grain-deficit provinces could negotiate contracts directly with surplus provinces to acquire needed grain above that already assured by the central government. The price of this grain was not regulated by the central government, but was free to fluctuate in response to changes in supply and demand. The flexibility of the price for this grain moving between provinces outside the central
40 J1- Shlfa,- "Henan Takes Measures to Sell, Store Food Grain," Foreign Broadcast Information Service, Daily Report- China, July 25, 1984, quoting Xinhua Domestic Service, July 20, 1984.
41 Cao Dian, "Heilongjiang's Tight Rice Market," Economic Information, Mar. 9, 1985.
42 Wang Zhenzhi, Wang Yongzhi, and Wei Yunlang, "Several Ways of Thinking About Agricultural Prices," Problems of Agricultural Economics, No. 2, 1985, p. 31.
43 Liu Yunqian, "A Discussion of Problems in the Development of Grain Production and Circulation," Problems of Agricultural Economics, No. 6, 1986, p. 25.
17 plan was said to have alleviated somewhat the contradiction between surplus and deficit provinces."
The elimination of the government monopoly on pork procurement also increased interprovincial flows. Prior to the decontrol of pork prices in 1985, 80 percent of Guangdong's pork consumption was derived from local production, with the balance supplied by other regions, notably Hunan Province. After the pork market was freed up in 1985, the volume of pork supplied from extra- provincial sources rose sharply to about 40 percent, largely from Hunan where the share of local pork sold out of the province more than doubled to 40 percent, with Guangdong as the largest market.45
These adjustments fell short of their objectives. After the price paid to exporting regions was raised, the level still remained too low to provide adequate incentives for increasing output in surplus regions. A higher level of outward transfers was still said to cause more local financial losses.46 Moreover, the 1985 reform did not raise the price paid by grain- deficit regions. Deficit regions continued to pay a transfer price based on the old quota price, and the central government absorbed the losses associated with paying the outward transfer price based on the higher contract price instituted in 1985.47 As a result, the state faced growing demands to supply low-priced grain to grain-deficit regions.
Thus, the 1986 Number One Document of the central committee announced that further changes would be made in the system of transfers, including a readjustment of transfer prices and the financial subsidies such transfers entailed.48 The Ministry of Finance and the Ministry of Commerce were jointly charged with the responsibility for working out the detailed implementation rules, which were to be submitted as soon as possible to the state council for its approval. The new regulation, dated April 8, 1987, was published in mid-1987 and was to have gone into
44 Liu Yunzhou, Zhou Binbin, Gao Hongbin, and Chen Jian, "Non-Commercialization, Semi-Commercialization, Commercialization: The Crux of China's Grain Problem and Our Way Out," Problems of Agricultural Economics, No. 6, 1986, p. 21.
45 Dia° Xlnshen, "Reform Tasks in Market Formation," Economic Research, No. 8, 1986, pp. 43-44.
46 Wu Xiang and Lu Wenqiang, "Different Perspectives on the Grain Problem," Problems of Agricultural Economics, No. 1, 1986, p. 18; Ding Shenjun, "A Theoretical Inquiry Into a Strategy for Developing Grain in China," Theoretical' Monthly, No. 3, 1986, reprinted in Agricultural Economics, No. 4, 1986, p. 168; Zhou Tao and Xu Weiqun, "An Introductory Analysis of the Influence of the Circulation of Grain on Grain Production," Economic Reference, July 20, 1987, p. 4.
47 Wang Zhigiang and Fang Yupeng, "Suggestions for Ensuring a Steady Increase in Grain Production," Problems of Agricultural Economics, No. 9, 1985, p. 101; Ding Shenjun, "A Theoretical Inquiry Into a Strategy for Developing Grain in China," Theoretical Monthly, No. 3, 1986, p. 169, reprinted in Agricultural Economics, No. 4, 1986, p. 168.
48 "Plan of the Chinese Communist Party Central Committee and the State Council for Rural Work in 1986," New China Monthly, No. 2, 1986, p. 55.
18 effect at the beginning of the 1987 grain year.49 The regulation proposes two methods for the case of deficit regions where procurement falls short of sales obligations. The first is the case in which the deficit region can make- up the shortfall itself by stepping up procurement of negotiated-price grain within its own boundaries. In that case, the State is to provide an additional appropriation equal to the contract price for that quantity of grain and an additional subsidy of 128 yuan per ton. This is a new provision, apparently to provide grain-deficit provinces with more incentives to meet their own needs. But the provision limits the price that the state pays for that grain by limiting the appropriation to the fixed contract price plus a fixed subsidy, regardless of the price of negotiated-price grain.
If the needs of the deficit province cannot be met by grain procured locally at the negotiated price, and are met by grain brought in from other provinces, the system is more complex. The state provides the deficit region with special appropriations and a subsidy, but requires the importing and exporting provinces to negotiate and set the actual price for transferred grain.50 It appears that the deficit region is no longer being guaranteed access to a fixed quantity of externally supplied grain at a fixed price, but rather the region is being provided with a guaranteed quantity of funds. The quantity is related to the central government's view of the local grain shortfall. But the actual quantity of grain to be supplied will depend on the price negotiations that the deficit region enters into with potential suppliers.
A similar scheme was soon seen within some provinces. In Jiangsu, for example, grain-exporting counties were entitled to a special subsidy of 100 yuan per ton of grain they supplied within the contracted amount. The subsidy was to be paid by the city or county receiving the grain. Transfers of grain beyond the contract or guarantee amount were to be of negotiated-price grain. For these transfers, the supplying county receives both a subsidy paid by the deficit region and an additional payment from the provincial grain department of management fees, set in accordance with a higher state standard. This new system was to provide more incentives for grain production in surplus regions 51
It is difficult to judge how the new system has actually worked in practice. In particular, it is not clear whether there continues to be a significant volume of transfers planned under the old rules. The April 1987 directive was silent on this
49 Ministry of Finance, "Regulation Concerning the Implementation of the Financial Contract for Grain Procurement, Sales and Transfers," Finance, No. 6, 1987, pp. 42-3.
50 A confirmation of the negotiation over the price of transferred grain is provided by Wang Zhanzhi, Agricultural Prices Wei Yunlang, and Wang Yongzhi, "Reflections on and the Way of Dealing with the Reform of Enterprise in China," Management World, No. 3, 1987, reprinted in Commercial Economics and Commercial Management, No. 7, 1987, p. 102.
51 Zhou Zhenfu, "Linking Economically Grain Exporting and Grain Importing Regions in Jiangsu," Economic Reference, Feb. 18, 1987.
19 point. But one other source stated that the central government's Grain Bureau in the Ministry of Commerce would continue to manage directly the supplies of grain flowing to the major municipal- ities of Beijing, Tianjin, and Shanghai.52 Presumably, these cities have continued to receive food grains under the old system, and have not had to rely entirely on grain purchased from other regions at negotiated prices.
Moreover, in the fall of 1988, The State Council passed a more centralized plan for interprovincial redistribution of rice.53 Under the new system, interprovincial flows of rice were made part of the command plan, which localities had to guarantee fulfilling. To assist the grain departments of provincial and local governments in meeting these compulsory targets for the transfer of grain, beginning in the fourth quarter of 1988, other units, ministries, and individuals were precluded from partici- pating in the rice trade, particularly from sending representatives to purchase rice in producing regions.54 Also, the Ministry of Commerce was charged with establishing state-guided wholesale markets for grain in Jiangxi, Hunan, Hubei, Anhui, and Henan, suggesting that existing wholesale markets in these areas will come under the direct supervision of the Ministry of Commerce.55
All this suggests that planned transfers remain an important component of interprovincial grain flows, and that the central government by 1988 was seeking to strengthen its hand in managing unplanned flows that occurred at prices negotiated between surplus and deficit regions. But the financial aspects of the system introduced in early 1987 must have met with at least some success, because in the fall of 1987, Hu Ping, the Minister of Commerce, announced that the system of procurement, transfer of grain, and the financial contract for transfers would be extended for another 3 years.56
52 Wang Zhanzhi, Wei Yunlang, and Wang Yongzhi, "Reflections on and the Way of Dealing with Reform of Agricultural Prices in China," Management World, No. 3, 1987, reprinted in Commercial Economics and Commercial Enterprise Management, No. 7, 1987, P. 102.
53 References to the new state council directive reinstating a system df centrally controlled command plans (Zhilingxing jihua) for the interregional flows of rice are contained in Chen Yun, "The Grain Procurement and Sale Contract Plan Will Not Change; Next Year Grain Will Not Play a Role in Influencing Prices," People's Daily, Oct. 11, 1988. Hu Ping, "The National Grain Work Conference Calls on Grain Departments at each Level to Strengthen Grain Management and Stabilize the Market for Grain," Chinese Commerce, Oct. 20, 1988, and New China Monthly, Oct. 1988, pp. 64-5. "Strengthen Grain Market Management; Guarantee the Needs of the People's Livelihood," Economic Daily, Oct. 11, 1988. Economic Daily Commentator, "Clearly Understand the Grain Situation; Improve the Flows between Surplus and Deficit Regions," Economic Daily, Dec. 26, 1988.
54 Economic Daily Commentator, "Grasp Well Grain Procurement and Interregional Transport, Strengthen the Management of the Grain Work," Economic Daily, Oct. 24, 1988.
55 "Strengthen Grain Market Management; Guarantee the Needs of the People's Livelihood," Economic Daily, Oct. 11, 1988.
56 Chen Yun, "The Grain Procurement and Sale Contract Plan Will Not Change; Next Year Grain Will Not Play a Role in Influencing Prices," People's Daily, Oct. 11, 1988. Hu Ping, "The National Grain Work Conference Calls on Grain Departments at each Level to Strengthen Grain Management and Stabilize the Market for Grain," Chinese Commerce, Oct. 20, 1988, and New China Monthly, Oct. 1988, pp. 64-5.
20 Two Case Studies
Two case studies illustrate the continuing adjustments to the rapidly changing production environment in the reform period.
Guizhou
Although Guizhou had a modest grain surplus in the 1950's, by the 1970's, Guizhou was among China's poorest provinces.57 Guizhou in the late 1970's had the highest concentration of chronic rural poverty and depended heavily on grain produced in other regions, receiving an inflow of 500,000-700,000 tons of grain annually.58 This level of inflow into Guizhou continued in the early 1980's and by 1985 the inflow hit a peak of more than 1 million tons (Appendix 1). These flows were critical to the provincial government. Guizhou's total grain output in 1983, for example, was 7.03 million metric tons, so the inflows that year were less than 10 percent of local production.59 But most locally produced grain was retained by producers for their own consumption, so the inflow was much more important compared with the amount of grain procured by the provincial government for resale. In 1983, provincial procurement was just under 900,000 tons.60 Thus, inflows constituted a third of the grain at the disposal of the provincial government. By 1985, the importance of the inflows was substantially greater.61
Guizhou is a well-documented example of the implementation, beginning in 1982, of the guarantee system.62 The province was given annual targets for procurement of 700,000 metric tons and sales of 1.2 million metric tons (table 4). The central
Table 4--Grain guarantee system in Guizhou Province, 1982-84
Item Guarantee amount Actual amounts 1982 1983 1984
Metric tons
Procurement 700,000 775,000 889,350 675,400 Sales 1,200,000 1,169,965 1,427,600 1,472,085 Inflows 500,000 538,025 460,675 665,620
57 Kenneth R. Walker, Food Grain Procurement and Consumption in China (Cambridge: Cambridge Univ. Press, 1984), P. 188.
58 Nicholas R. Lardy, Agriculture in China's Modern Economic Development, (Cambridge: Cambridge Univ. Press, 1983), p. 173.
59 State Statistical Bureau, Chinese Statistical Yearbook 1984 (in Chinese), p. 149.
60 Guizhou Annual 1985, p. 597.
61 This conclusion is based on a decline in provincial output in 1985 to 5.95 million metric tons, 10 percent below the 1983 level of 6.54 million metric tons. State Statistical Bureau, Chinese Statistical Yearbook 1983 (in Chinese), p. 166; Statistical Yearbook of China 1986 (in English), p. 145.
62 Guizhou Annual 1985, pp. 597-98.
21 government pledged to make up the difference through a guaranteed inward transfer of 500,000 tons of cereals per year.
The Guizhou provincial authorities, in order to meet these targets, assigned quantities of procurement, sales, and transfers to each of their subordinate administrative units--four prefec- tures, two municipalities, and three autonomous zhou (table 5).
There are several points about this system that should be noted. First, it appears highly bureaucratic. The province assigned a specific target for procurement, broken down further into its quota and above-quota amounts, and for sales for each of the main administrative units within the province. Each unit also had a target it had to guarantee for the outward transfer of grain (except the provincial capital of Guiyang, which was allowed to retain all of its local production), and the province assigned a targeted quantity of inflow grain. The existence of both inflow and outflow targets for eight of the nine subprovincial units reflects differences in the structure of grain production by region. The inflows and outflows are undoubtedly different types of grain. Also, the province built in a certain amount of reserve or leeway for each target. For example, the central government assigned the province a total procurement target of 700,000 tons. But, the sum of the province's assignments to the provincial subunits was 750,000 tons. Similarly, the sum of the sales targets (1,160,000 tons) was slightly under the target of 1,200,000 tons that the central government assigned to the province. However, the sum of the net inward transfers to the subunits guaranteed by the province was equal to the quantity of external grain that the state had guaranteed to the province.
Second, the net deficit position of Guizhou Province was not due to the need to feed larger cities. The degree of urbanization in the province is relatively low, and the net grain supplied to the provincial capital, Guiyang, was less than half the total of outside grain supplied to the province. Indeed, with the exception of Qianxinan, every subprovincial unit depended in part on grain brought in from outside.
Table 5--Grain guarantee system within Guizhou Province, 1982-84
Political Procurement Sales Transfers entity Outward Inward Net inward
1,000 metric tons
Zunyi 180.5 213.5 25 75 50 Anshun 90.5 133.5 1.5 64 625 Qiannan 87 116.5 13.5 50 36.5 Bijie 117 141.5 12 67.5 55.5 Tongren 85.5 113 18 40 22 Qiandongnan 85 100.5 17.5 40 22.5 Guiyang 8 194 0 210 210 Qianxinan 59 53.3 12 7 (5) Liupanshi 37.5 83.5 .5 46.5 46
22 Third, Guizhou's grain inflow was supplied by a surprisingly large number of provinces from many regions of the country. In 1984, for example, grain was supplied from the following provinces: Anhui, Guangxi, Hebei, Heilongjiang, Hunan, Jiangsu, Jiangxi, Jilin, Liaoning, Shanghai, and Sichuan. Not only are some of these provinces (Heilongjiang and Jilin) geographically remote from Guizhou, but several (Hebei, Liaoning, and Shanghai) are themselves deficit regions.
Finally, even a province as poor as Guizhou had to purchase grain from other provinces above and beyond the amount supplied by the central government under the guarantee system. The cumulative amount of grain brought into the province during 1982-84 exceeded the guarantee quantity by 164,320 tons (table 5). In 1983, inward transfers were 40,000 tons less than the guarantee amount. This appears to be an example of the requirement that if centrally sponsored inflows exceed the contracted amount, then the province must repay that excess in the following year by importing less. Excess inflows in 1982 were about 49,000 tons. Larger excess inflows occurred the following year, but most were extra-plan transfers, or purchased by provincial and local grain departments from external sources at negotiated prices. In 1984, when inflows rose, more than 100,000 tons were purchased at negotiated prices from Henan, Hubei, Jiangxi, Liaoning, and other provinces.°3
Jilin
One of the most dramatic examples of the initial inability of China's marketing system to adjust to rapid changes in regional supply was in Jilin Province in the first half of the 1980's. Jilin achieved a spectacular growth of grain output after 1979 (table 6). Between 1979 and 1986, output rose almost 55 percent, far surpassing the simultaneous national expansion of 17.8 percent. The sharp rise in cereal output indicated that in 1983, Jilin's per capita production, more than 530 kilograms, ranked highest of all of China's provinces. One of the most notable aspects of that growth was the key role played by corn. In 1981, Jilin was China's fifth largest corn producer. By 1985, Jilin ranked second only to Shandong.64 By 1987, Jilin was China's largest producer of corn.65 Jilin is unusual among China's provinces in the relatively low share of wheat and rice in its total cereal output.
Jilin's cereal output also exhibits unusual annual variations, presumably due largely to annual fluctuations in weather. Grain production rose almost 50 percent in 1983, grew another 11 percent in 1984, fell 25 percent in 1985, recovered almost 15 percent in 1986, and then reached an all-time high in 1987.
63 Wang Rongxiang, "Guizhou's Inward Grain Transfers are 2000 Million Jin," Economic Information, Mar. 2, 1985•
64 State Statistical Bureau, Statistical Yearbook of China 1981 (Chinese edition), p. 149; Statistical Yearbook of China 1986 (English edition), p. 145.
65 State Statistical Bureau, Statistical Yearbook of China 1988 (Chinese edition), p. 250.
23 Table 6--Jilin Province grain output
Grain 1979 1980 1981 1982 1983 1984 1985 1986 1987
Million metric tons
Total 9.03 8.58 9.22 10.00 14.78 16.35 12.25 13.98 16.76 Rice 1.02 1.07 1.13 1.45 1.51 1.91 1.84 1.75 2.23 Wheat 0 0 .16 .16 .15 .16 .10 .07 .06 Corn 5.34 5.07 5.27 5.89 9.41 11.04 7.93 10.16 12.32 Soybeans .60 .61 .79 .72 .88 .81 .90 .84 .97 1979 = 100 Grain output index: National 100 97 98 107 116 123 115 118 122 Jilin 100 95 102 111 164 181 135 155 186
Sources: State Statistical Bureau, Chinese Statistical Yearbook 1981, p. 147; Chinese Statistical Yearbook 1983, p. 166; Chinese Statistical Yearbook 1985, p. 259; Chinese Statistical Yearbook 1987, p. 172; Chinese Statistical Yearbook 1988, pp. 248-50. State Statistical Bureau, Social and Economic Statistics Department, Chinese Rural Statistical Yearbook 1986, p. 56. Agricultural Yearbook Compilation Commission, Chinese 1980 Agricultural Yearbook, p. 27; Chinese 1981 Agricultural Yearbook, p. 101. Jilin Provincial Government General Office, The Situation in Jilin Province (Changchun: Jilin Provincial People's Publishing House, 1987), p. 874.
Sharp annual fluctuations in grain output along a rapidly rising trendline of total output growth have created many strains in the grain storage and distribution system of Jilin Province. Jilin was an important net exporter of cereals through the First Five-Year Plan (Appendix 1). However, Jilin's supply of cereals to other provinces in the ensuing 23 years dropped to a trickle, reflecting the national policy of regional self-sufficiency in grain, which curtailed interprovincial transfers rather than shrinkage of the province's surplus. Between 1957 and 1980, cereal production in Jilin grew more rapidly than population. Grain production doubled from 4.294 million metric tons in 1957 to 8.576 million metric tons in 1980, while the population rose by 75 percent.66 By contrast, national grain production grew by less than two-thirds over the same period. The growth of Jilin's grain output began to outstrip the population expansion by a wider margin in the early 1980's, as Jilin's grain production began to take off. By 1983, when corn production hit record high of 9.4 million metric tons, a huge surplus emerged in the province.
Late in 1983, Jilin Province petitioned the state council for emergency assistance, reporting that much of the record harvest might rot due to its inability to either store the grain properly or ship it out of the province.67 After an investigation by a central government delegation, headed by Vice-Premier Tian Jiyun and including senior officials from the Ministry of Commerce, the State Economic Commission, and the Ministry of Railroads, the
66 Jilin Provincial Government General Office, The Situation in Jilin Province (Changchun: Jilin Provincial People's Publishing House, 1987), pp. 865, 874.
67 "State Offer Saves Grain Surplus," Beijing Review, No. 9, Feb. 27, 1984, p. 8.
24 State Council agreed to substantially increase state procurement of grain and to ship more grain, particularly corn, to other points within China but outside the province.68 In January 1984 (which falls in the 1983 grain year), more than 300,000 tons of grain were shipped out on an expedited basis.69
Several points concerning this transfer are worth noting. First, although 45,000 tons were transferred to northeast provinces of Heilongjiang and Inner Mongolia, the great bulk (255,000 tons) was shipped to areas south of the Shanhaiguan pass, or China proper. Second, the grain was sent to diverse destinations in central, south, and northwest China, including Hubei, Jiangsu, Zhejiang, Jiangxi, Ningxia, Gansu, and Xinjiang Provinces. Rail shipments to these provinces were unusual because they were via specialized through-trains, resulting in more efficient shipment than the usual method of mixed trains. Third, both ships and railroads were used to move the excess corn. The Ministry of Communications supplied at least four vessels to move the grain south from Dalian, the main seaport in the northeast, located in Liaoning Province, and at the same time a special transshipment facility for grain was constructed at Qinhuangdao, the major port in north China, at the terminus of a major rail line running from Jilin to the port. Finally, although extra quantities of grain were shipped to markets outside the province, this quantity was only a small part of the surplus. Thus, the state instituted a new system in which peasants were paid to store grain for the state (min dai quo zhu). By the end of the 1983 grain year, peasants were storing almost 2 million tons of 70 state-owned grain.
While special intervention by the state council appears to have alleviated the crisis in 1983, no permanent mechanisms to use Jilin's burgeoning grain surplus were instituted. When grain output rose to a new record in 1984, the problem reemerged.fl In 1984, grain output rose 1.565 million metric tons, of which corn increased 1.63 million metric tons. Based on state policies, the state procurement agencies reportedly bought a record 8.40 million metric tons of the cereal crop, the great bulk of which was corn.72 However, because of a lack of state storage facilities, by January 5, 1985, peasant storage of
68 Department of State, Beijing 05461, reported that the state agreed to ship 2.2 million metric tons of corn from the Province, but as shown in Appendix 1, cumulative outward transfers to other provinces during 1981-85 were only 1.7 million tons. It appears that the central government did not allocate adequate transportation capacity to fulfill this pledge.
69 "Jilin Transfers Out 300,000 Tons of Grain in One Month," Economic Daily, Feb. 3, 1984.
70 Under the system, peasants were paid 80 percent of the state purchase price when the agreement to store state grain was reached. The remaining 20 percent was to be paid upon subsequent delivery of the grain to state-owned storehouses. The state paid the peasants 10 yuan every 6 months for each ton of grain stored for the state. "Crisis over Surplus Grain Solved in Jilin," China Daily, Mar. 27, 1984.
71 Lan Zhong, "It's Imperative to Eliminate Compulsory Grain Procurement," The New Long March, No. 3, 1985, reprinted in Agricultural Economics, No. 6, 1985, p. 101. Oiang Xiaochu, "Promote the Transformation of Grain; Develop the Rural Economy," People's Daily, June 18, 1985.
72 Jilin Provincial Government General Office, The Situation in Jilin Province (Changchun: Jilin Provincial People's Publishing House, 1987), p. 904.
25 state-owned grain had jumped to 5.15 million metric tons, more than two and a half times the level of the previous year. At the direction of the state council, the People's Liberation Army Naval forces used military loading facilities and navy vessels to move grain from the northeast, including Jilin Province, to central China by sea. m While the navy was commended for the assistance it provided, no specific reporting sheds light on the actual volume of cereal shipped by the military. And total state shipments of corn out of the province were only 300,000 tons, a tiny fraction of the surplus.(4
Although Jilin's grain output fell sharply in 1985, the surplus grain problem persisted. Apparently reacting to a central government proposal to cut the quantity of grain it would transfer out of the region, Jilin officials specifically requested that the modest level of transfers to other provinces and their exports to international markets be continued at the 1984 level.Th
As this 1985 report suggests, in the absence of an effective mechanism for selling its grain internally, Jilin, perhaps along with other northeastern provinces, began to sell significant quantities of corn on the international market. That trade may have been facilitated by changes in institutional arrangements for China's foreign trade. Jilin, beginning in 1980, was authorized to initiate so-called self-managed foreign trade carried out independent of central administration.76 As recently as 1983, China was a net importer of almost 2 million tons of corn (table 7). But in 1984 and 1985, corn exports rose sharply to 0.9 and 6.0 million metric tons, and imports fell precipitously. By 1985, China was the second largest supplier of corn to the world market. In 1986, China's exports were about 5.7 million metric tons. Jilin Province was responsible for a very large share of this changed pattern of international trade in corn. China's corn exports in the early 1980's were almost exclusively from Jilin Province (table 7). And as China grew to become a major world supplier of corn in the mid-1980's, about half of the export volume was from Jilin.
The unexpected entry of China to the ranks of major suppliers to the world corn market appears to reflect an inability or unwillingness of the central government to use the corn domestically, either by shipping it elsewhere in China or, as will be shown in a later section, converting it to animal feed or industrial use.
73 Zhao Yuelong, "Navy Helps Ship North China Grain to South," Xinhua Domestic Service, Nov. 23, 1984, in Foreign Broadcast Information Service, Daily Report-China, Nov. 27, 1984, pp. 1921-22.
74 Lan Zhong, "It's Imperative to Eliminate Compulsory Grain Procurement," The New Long March, No. 3, 1985, reprinted in Agricultural Economics, No. 6, 1985, p. 101.
75 Li Dongdong and Zhou Mingfu, "A Discussion of our Country's Grain Situation," Economic Daily, Oct. 19, 1985, p. 2.
76 China Daily, "Jilin To Increase Export Earnings," Sept. 10, 1987.
26 Table 7--China's corn trade
Year Exports Imports Net exports Jilin exports
Metric tons
1980 - 1,696,300 (1,696,300) 1981 747,900 (747,900) 17,464 1982 28,385 1,611,526 (1,583,141) 20,348 1983 61,149 1,986,317 (1,925,168) 53,853 1984 910,731 46,453 864,278 562,439 1985 5,957,252 80,000 5,877,252 2,058,069 1986 5,705,798 683,138 5,022,660 2,800,000
-- Not available or negligible.
Sources: Ministry of Foreign Economic Relations and Trade, Almanac of China's Forei n Economic Relations and Trade 1984, pp. 944, 947, and 1090; Almanac of China's Foreign Economic Relations and Trade 1985, pp. 814 and 952; Almanac of China's Foreign Economic Relations and Trade 1986, pp. 967 and 1099; Almanac of China's Forei n Economic Relations and Trade 1987, pp. 330 and 416. Jilin Provincial Government General Office, The Situation in Jilin Province (Changchun: Jilin Provincial People's Publishing House, 1987), p. 874. Xinhua domestic service Oct. 28, 1987, quoting interview with Gao Di, Jilin Provincial CPC Committee Secretary in Foreign Broadcast Information Service, Daily Report-China, Oct. 30, 1987, p. 27.
One should not surmise that there is no demand for corn elsewhere in China. Imports, although at a temporarily reduced volume in 1984 and 1985, continued throughout most of the 1980's (table 7). Jilin's provincial authorities, because they expected to have an ongoing corn surplus far beyond the limited amount of within-plan corn shipped by the central government, sought out these domestic markets, taking advantage of earlier reforms that allowed them to sell extra-plan grain to external buyers at negotiated prices. In March 1987, Jilin Province announced that it had entered into a long-term agreement to sell corn to Beijing and Tianjin.77 For Jilin, the agreement provides a regular outlet for part of its surplus corn, a surplus not expected to be alleviated by grain transfers undertaken directly by the state. Because of the limits on centrally transferred grain, Jilin expects to have a surplus of 2-3 million tons of corn per year. For two of China's largest municipalities, the agreement provides a regular source of inputs for their growing feed grain industries and for industrial uses, presumably largely production of alcoholic beverages. In both cities, rising per capita incomes have led to rapidly increasing demand for highly income-elastic commodities, such as meat and alcoholic beverages. The cumulative extra-plan sales to these two municipalities during 1987-89 will be 3 to 7 million metric tons. The scheduled shipments for the first quarter of 1987 were 500,000 tons, of which 300,000 tons had been shipped by the end of February.
The most noticeable feature of the agreement is that the price the two municipalities will pay will be set each year, based on the prevailing price in the free market. That provides substantial incentives for increased production in Jilin, at
77 Fang Xiangqun, "Beijing, Tianjin and Jilin Establish a Long-Term Grain Purchase and Sales Relationship," Economic Information, Mar. 14, 1987, p. 1.
27 least in the short run, because the market price has been above the government's contract purchase price. The agreement also provides flexibility to adjust the annual volume of shipments, partly in response to changing production levels in Jilin. Finally, Beijing and Tianjin agreed to provide financial, technical, and material assistance in constructing the storage and shipping facilities that are needed in Jilin Province.
In 1988, Jilin entered into an agreement to barter its corn for pork supplied by Sichuan. While this will provide a market for 550,000 tons of corn from Jilin, the agreement differs from that discussed above in that it is only for the year 1989.78
Those locally initiated transfers continue to be important because the state's plan for the interprovincial transfer of grain apparently excludes corn completely.79 Transfers of corn still appear to be made on an ad hoc emergency basis in response to specific crises. For example, in late 1988, the state council approved the transfer of 1 million metric tons of corn from Jilin, Inner Mongolia, and Liaoning to areas of south China.80 The transfers to Guangdong, Guangxi, Hubei, and Sichuan were required because fodder shortages had led to widespread slaughter of piglets, and because of a major crop failure in Guangxi. A mobilization campaign, including several ministries and units of the People's Liberation Army, was initially unable to meet the state council's goal. But by the end of December, the shipments were reportedly completed.81
Persisting Constraints
While official state policy has supported a shift toward greater commercialization of grain, including more interregional marketing, many factors hinder implementation of this policy. Key among these factors is the attitude of lower level bureaucrats.
Continued Bureaucratic Obstacles
Despite official central government policy relaxing artificial constraints on interprovincial trade of agricultural products, provincial and local blockades and barriers persist. Evidence of, these bureaucratic barriers comes from diverse sources, but is difficult to evaluate. A few examples follow.
78 Jilin Provincial Service, "Jilin Signs Trade Contracts with Sichuan," in Joint Publications Research Service, CAR-88-081, Dec. 22, 1988, p. 50.
79 Mi Yi and Zhao Kang, "The South Spends Foreign Exchange on Imports; the North Has Excess Stockpiles; Inner Mongolia Desperately Seeks Market for 500 Million Kilograms of Corn," Economic Reference, May 22, 1988.
80 Pan Gang, "A Warning on Grain: A Comment on the Question of Grain Management and Consumption," People's Daily, Dec. 14, 1988.
81 "North Drive Brings in Grain Relief to South," China Daily, Dec. 29, 1988.
28 Governments in the four regions of northwest China (Gansu, Inner Mongolia, Qinghai, and Xinjiang) during May-June 1986 imposed severe limits on the sale of wool to other regions to strengthen local wool processing and woolen cloth production in the northwest.8 Prior to the imposition of these restrictions, herdsmen could sell their surplus output at a substantially higher market price (20 yuan per kilogram, compared with about 6 yuan per kilogram in some regions) after meeting a wool sales quota at a state-fixed price. Under the new regulations, herdsmen are reportedly required to sell their entire output at the lower price to local government agencies that control the wholesale distribution of wool. Because this led to reduced sales of wool to other regions, wool processing and manufacturing facilities in east China have been forced to close down or curtail production. Equally important, the incentives for wool production in the northwest, where the vast majority of China's sheep are raised, were also reduced.
Similarly, interprovincial grain marketing is still inhibited by provincial and local government intervention. In the fall of 1987, several provinces reportedly restricted or embargoed the sale of negotiated-price grain to other regions. The Grain Bureau in Hebei Province placed an outright ban on the moving of grains and edible oilseeds purchased at negotiated prices out of the province. In Henan, transfer of such grain, even by individuals, required the approval of the Grain Bureau of the provincial government. Controls were reimposed on the outward transfer of husked and unhusked rice in Jiangxi. Special approval was needed for any shipment of more than 1 ton. In Shanxi, the Provincial Grain and Oilseed Company announced its assumption of control of corn and sorghum shipments. In Heilongjiang, the provincial government decreed that any movement of wheat or wheat flour out of the province that required the use of a cart or involved more than half a ton could not be undertaken without a transport permit issued by the Provincial Grain Bureau.83
These barriers directly violated the central government policy, announced in 1982, encouraging the interprovincial transfer of negotiated-price grain, particularly the provision eliminating the requirement of approval by the Provincial Grain Bureau in the surplus region. While farm producers in surplus regions benefit from the sale of grain in external markets, bureaucrats in these regions are wary that exports to other regions will raise grain prices locally. Since the 1985 procurement reform requires state food processing units to purchase grain in the market rather than continue to rely on grain procured by the state at a lower price, local government officials have watched profits from food processing decline. While bottling up grain output in the surplus region may be disadvantageous to producers, it apparently
82 Li Xiguang, "Wool Producers Limit Out-of-Area Sales," China Daily, July 23, 1986.
83 - " Shi Xiuyln, Some Provinces Restrict the Departure of Negotiated Price Grain," China Rural Management, Oct. 13, 1987, p. 4.
29 in the level serves the short-term interests of local bureaucrats 84 of profits generated by local enterprises. rents by local Other obstacles stem from the attempt to extract and 1985, for units controlling transport facilities. In 1984 City, Hunan example, the Yongjiawan Railway Terminal in Yueyong The terminal, Province, held up the shipment of rice to Beijing. freight cars to the beginning in October 1984, refused to provide service Yueyang Food Bureau unless the bureau paid a special That company charge to a licensed shipping service company. The Food reportedly was a front controlled by the terminal. cars needed Bureau, after negotiating for only 15 of 49 freight of two state to ship rice to Beijing, enlisted the support of Commerce, ministries, its own supervising agency, the Ministry nominally under the and the Ministry of Railroads. The terminal, ignored the Changsha Railway Bureau of the Ministry, nevertheless by People's Daily direct order of the ministry. An investigation began, the revealed that 5 months after the extortion scheme of grain, and terminal was still holding up seven railway cars to People's the Minister of Railroads entered the case, promising Daily to take immediate action against the terminal. units that Such obstacles originate not only with powerful urban but are able to frustrate the directives of central authorities, action sometimes also in the countryside where popular peasant the spring of blocks the flow of agricultural commodities. In blockaded the 1988, peasants near Jiangzhang Township in Shaanxi wishing to pass. local road and demanded tolls from county trucks of fresh The blockade stalled trucks carrying 17,800 kilograms in the seat of milk, preventing their travel to the milk factory to let the Fufeng County. A township cadre ordered the peasants sour. The trucks pass, but they refused, and the milk turned the township drivers reportedly dumped the milk in the yard of government compound as a protest against the government's the unauthorized unwillingness to pressure the peasants to end imposition of tolls.86
Transport sale of Although the reforms of 1982 allowed the interprovincial the shortage grain outside the state plan at negotiated prices, and local of transport facilities available to both individuals an acute government authorities to implement these sales remains in Hubei constraint. One documented case is Jingmen Cdunty
sources has raised grain 84 Many reports mention or discuss how rising demand from extra-provincial in the Markets for Agricultural and prices on local markets. See for example, Yan Shanqing, "New Directions which discusses the rising price of rice Subsidiary Products in Hunan," Economic Reference, July 30, 1985, a food-grain deficit region. The in local Hunan markets near the border with Guangdong Province, explicitly stated to be in response to rising restrictions on the outflow of grain from Shanxi Province were local prices for these commodities.
85 1985. "Exhortation Blocks City's Rice Supply," China Daily, Feb. 9,
23, 1988. 86 "Workers Spill Milk in Red Tape Protest," China Daily, May
30 Province, which had a huge surplus of grain on hand by 1982.87 Although the county was designated a commodity grain base as part of a national marketing program, the state plan did not provide for adequate transport capacity to transfer the county's surplus to other administrative units. In 1982, the county's Grain Bureau shipped out only 156,925 tons of grain. After 1982, when extra-plan sales of negotiated-price grain were authorized, the county contracted to sell an additional 49,050 metric tons of grain at negotiated prices to 25 different units in 15 different provinces. However, by May 1983, only 19,715 tons had been shipped, leading to a large grain carryover. The main difficulty the county faced was arranging transportation. Although the north-south Yuezhi rail line traverses the county, little grain is carried from the county by rail. Rail capacity was allocated to serve the county's oil refinery, thermal powerplant, and other large- and medium-sized state factories. Thus, the county grain office relied in large measure on its 37 trucks to haul the grain. The available fuel per truck was less than 500 kilograms per year, or less than a half gallon per day. This amount was not sufficient even to consolidate grain within the county as a preparatory step to shipment over longer distances.
A similar problem occurred in Shanxi Province. To dispose of its burgeoning grain output, Yanbei Prefecture, one of the main grain-producing regions in the province, in 1983 signed contracts to sell its surplus to Beijing, Tianjin, Hunan, and Guangxi. But the railway bureau gave priority to moving coal out of the province, and 12 of Yanbei's grain contracts went unfilled.88
The allocation of rail capacity to the transport of grain also reflects the evolution of state policy on transfers. A large share of grain moving interprovincially went by rail. The total volume of grain moved by rail rose during the first plan period (1953-57) (table 8). Grain moving by rail rose as a share of total grain output. The volume of grain moving by rail declined in the early 1960's, reaching a low in 1962, but rising somewhat during the years of readjustment (1963-65) to reach a new high in 1965. The volume of grain moving by rail then stagnated during the Cultural Revolution years, and then dropped again reaching a new low in 1976. The declining share of grain output moved by rail did not occur because rail transport failed to develop during the Cultural Revolution. In fact, the total volume of freight carried by rail almost doubled between 1965 and 1978. But the share of railcar loadings allocated to grain fell by half, from 4.1 to 2.1 percent during the same period.
Since 1976, there has been a sharp increase in the share of railcars allocated to transporting grain. By 1987, the number of railcars loaded with grain had more than doubled; the total volume of grain loaded rose even more rapidly; and the share o
87 Li Saimin, Chen Yingming, Zeng Desen, and Wang Fuli, "A Suggestion for Strengthening the Key Link of Commodity Grain Base Circulation," Agricultural Technical Economics, No. 7, 1984, pp. 18-20.
88 Huang Jiasheng, "The Economic Benefits of Grain Transformation," Agricultural Technical Economics, No. 4, 1985, p. 20.
31 Table 8--Rail transport of grain, 1952-87
Cars loaded Share of Average grain Total grain Year per day all cars load per car volume loaded
Million Million Number Percent metric tons metric tons
1952 1,251 10.1 32.0 14.61 1957 1,217 5.7 39.2 17.41 1962 1,136 4.8 40.5 16.79 1965 1,342 4.1 43.7 21.40 1976 1,173 2.4 47.9 20.51 1978 1,335 2.1 50.3 24.50
1980 1,590 2.6 54.2 31.45 1982 1,773 2.9 53.3 34.49 1983 1,803 2.9 53.8 35.41 1984 1,796 2.7 54.2 35.53 1985 2,247 3.3 54.6 45.03 1986 2,285 3.3 55.3 46.51 1987 2.649 3.8 56.6 55.44
1For 1952-84, data were calculated on the assumption that the daily average number of freight wagons loaded had been based on a 365-day year. This assumption is borne out by published data on total volume loaded for 1985-87.
Sources: State Statistical Bureau, Chinese Statistical Yearbook 1983 (in Chinese), p. 312; Statistical Yearbook of China 1986, p. 328; Chinese Statistical Yearbook 1987 (in Chinese), pp. 419-20; and Chinese Statistical Yearbook 1988 (in Chinese), pp. 509-10. railcars allocated to grain also rose sharply. For those years for which data have been published (1984-87), the average distance this grain has moved by rail also markedly increased.89
However, the series in table 8 also makes clear that rail transport, which is centrally controlled, could not account for much of the huge increase in 1983 of the quantity of grain moving interprovincially. The quantity of grain loaded on railcars in 1983 and 1984 was not significantly greater than in 1982. Thus, much of the unprecedented 1983 increase of grain moving inter- provincially must have been by road or water. Since these means of transport are predominantly managed by government units at the provincial level or below or by individuals, much of the huge increase in interprovincial marketing was not centrally directed.
Storage
One of the key constraints on increased purchase of cereals by the state in the early 1980's was a shortage of storage facilities. Neither the quantity of storage capacity nor the quantity of grain stored under the control of the central government is disclosed, except inadvertently. Increments to storage prior to 1984 were clearly modest. Storage capacity for
89 During 1984-87, the average distance grain was shipped by rail was 741, 946, 912, and 1,034 kilometers. State Statistical Bureau, Chinese Statistical Yearbook 1986, p. 390; Chinese Statistical Yearbook 1987, p. 418; and Chinese Statistical Yearbook 1981, p. 509.
32 20 million metric tons was built during 1979-83, or about 4 million metric tons annually." That was quite small compared with annual net procurement, which rose almost 43 million metric tons in the same period.91 The lack of storage capacity meant local procurement agencies in some cases stopped purchasing grain, leaving peasants in grain-surplus regions with no sales outlet, particularly prior to the authorization of long-distance private mechanized transport in 1983. Elsewhere, where procurement continued, substantial additional costs were incurred due to inadequate facilities.
The best aggregate indicator of the insufficiency of storage is that by the end of 1984 the total quantity of state-owned grain being stored exceeded the storage capacity of state facilities by 50 percent.92 Most of the excess was stored either in the open, in other makeshift facilities, or was held by peasant households on behalf of the state.
Several well-known cases of the problems of inadequate storage exist. The problems in Jilin Province were reviewed earlier in this study. One of the best-documented cases at the local level is that of Jingmen County, an important commodity grain base in Hubei Province. The data in table 9 show the amount of grain in state warehouses measured at the end of May each year, the period when stocks were at their lowest point, and for November 1983, when stored grain reached a peak high following the fall harvest.
The failure to provide adequate storage during a period of increased output is clear from comparing grain storage in these state stores with the total amount of grain stored in the county. In November 1982, total grain storage reached 317,715 tons. In addition to the state stores, commune and brigade storage facilities held 980 tons, and 131,502 tons was kept in 284
Table 9--Grain in state warehouses, Jingmen County, Hubei Province, 1978-83
Stored in Stored in Year May November
Tons
1978 4,585 1979 9,555 1980 12,885 1981 34,790 1982 72,615 185,230 1983 108,160
= Not available.
90 Liang Ji, "Grain Distribution and Management in China," Economic Yearbook 1984, p. V-188
91 Procurement (measured in terms of trade grain) rose from 60.1 to 102.5 million metric tons between calendar years 1979 and 1983. State Statistical Bureau, Chinese Statistical Yearbook 1984 (in Chinese), p. 366.
92 State Council Agricultural Development Research Center Group Five, "The Balancing and Adjustment of the Demand and Supply of Grain," A Collection on Agricultural Economics, No. 5, 1985, p. 6.
33 makeshift open-air facilities. By May 1983, when stocks normally reached their nadir of the year, due to difficulties selling the surpluses elsewhere, 44,045 tons remained in open-air storage. Open-air storage is more costly than storage in regular facilities, costing about 12 yuan per ton per year, compared with 7.7 yuan for conventional facilities. Beyond this, grain stored in the open air is damaged by high humidity and heat, and pests, such as birds, rodents, and insects, all of which are more readily controlled in conventional facilities. As the problem of increasing annual carryover emerged, little new resources were devoted to building more storage facilities. Five thousand tons of storage capacity were added in 1982, bringing total capacity to 221,940 tons, while procurement rose by 30,000 tons. An additional 20,000 tons of capacity were to be built in 1983.
A partial, if temporary, solution to the storage problem was to initiate a system of peasants storing grain on behalf of the state. In Jilin, for example, 13 counties that had been developed as grain bases by the end of 1983 had an average of 920,000 households storing 2 million metric tons of grain for the state. Peasants storing grain are reimbursed for storage and drying expenses and for natural losses associated with storage. The province has also appropriated 1 million yuan to give to a subset of the 920,000 households to allow them to build improved storage facilities that will allow longer maintenance of grain quality. The state council approved the construction of an additional 20 million tons of state storage facilities in 1984-86.93
Wholesale Markets
Slow development of wholesale markets for grain has also constrained the expansion of interregional marketing of grain. When restraints on rural markets were first eased in the late 1970's, producers were allowed to enter rural free markets to sell their output, but only directly to consumers. Middlemen were still precluded from entering into commercial transactions, as they had been since the early 1950's when China adopted its system of mandatory purchasing of farm produce. By 1984, wholesale grain markets were revived in several key cities, where such markets had existed at least since the 19th century. Most noticeable was the revival of China's four largest traditional rice markets: Jiujiang (Jiangxi Province), Wuhu (Anhui Province), Changsha (Hunan Province), and Wuxi (Jiangsu Province). However, the volume of transactions in these markets in the latter half of the 1980's was quite small, indicating that the wholesaling function is not being met.
Feed Grain Production
The retarded development of the feed grain industry has both inhibited increased commercialization and interregional marketing of grain and contributed to inefficiencies in the animal
93 Liang Ji, "Grain Distribution and Management in China," Economic Yearbook 1984, p. V-188.
34 husbandry sector." Regions with a surplus of fine grains, such as rice, frequently feed huge quantities of these grains directly to animals. Regions with large surpluses of corn and other coarse grains, which are far more economic animal feeds, are not able to sell these products to regions where they could be used, nor do they process significant amounts of these surplus grains into animal feeds.
The absence of an animal feed industry was not surprising in the 1950's, when per capita grain output remained relatively low, and pigs, China's most important source of meat, were raised primarily by individual peasant families who fed them mostly household food wastes. But by the mid-1980's, per capita grain production was relatively high. It reached a record high in 1984 of 393 kilograms per capita, almost 100 kilograms above the peak of the First Five-Year Plan. In 1983-86, average per capita output was more than 25 percent higher than in the first plan. Yet, this higher level of production seems to have been used inefficiently. China did not begin to build factories to produce animal feed until the late 1970's, and as recently as 1982, less than 3 million metric tons of mixed and compound animal feed were produced (table 10). By 1986, the production level had risen sharply but, at less than 16 million tons, represented only a few percentage points of total grain production.
Only a small portion of Chinese feed grain production occurred in the province with the greatest surplus of corn, the primary ingredient of mixed and compound animal feeds. The production capacity of feed grain factories in Jilin in 1985 was only 1.2 million tons, and only 700,000 tons of grain were actually
Table 10--Production of mixed and compound animal feed
Year Amount
Million metric tons
1982 2.8 1983 4.5 1984 9.0 1985 13.75
1986 15.49
Sources: 1982-83: Liang Ji, "The Management and Distribution of Grain in China," China Economic Yearbook 1984, p. V-188. 1984-1985: Liu Yunclian, "China's Grain Commerce," China Economic Yearbook 1986, p. VI-218. 1986: Liu Yunclian and Wang Xuanshe, "China's Grain Commerce," China Economic Yearbook 1987, p. VI-154.
94 The most comprehensive treatment of the animal feed industry is in Francis C. Tuan, "China's Feed Industry: Recent Developments and Future Plans," United States Department of Agriculture, China Outlook and Situation Report, RS-85-8, 1985, pp. 31-35.
35 converted to mixed and compound animal feeds.95 By comparison, in early 1985, the stocks of excess grain held in the province were a several-fold multiple of this level. In addition to state storage facilities, which were filled to capacity, more than 5 million tons of state-owned grain were held by individual peasants.
As a result of the slow development of the feed grain production industry, huge quantities of grain were fed directly to animals. In the early 1980's, animals were consuming 30-35 million metric tons of grain, about 10 percent of China's grain production. A growing share of this was fine grain. Rice was being fed in ever-growing quantities to pigs and chickens in south China villages where rice was the main grain crop. Roughly 2 million tons were so used in Hunan Province, and 1 million tons in Guangdong Province in the early 1980's. Not only is rice more expensive than corn or barley, its nutritive value, as measured by its protein content, is 20-35 percent less, and the ability of animals to absorb the nutrients in rice is 10-20 percent less. Between 1965 and 1975, the mix of grain used to feed animals in Shanghai shifted unfavorably. The coarse grain share (including corn and barley) dropped from about 90 percent to 25 percent in the decade in which the state curtailed the interregional shipment of grain (table 11). That resulted in a 20-percent reduction in the nutritive value per unit of feed used to raise animals in the municipalityj and also possibly in an increase in the price per unit of feed.%
In pig production, the use of commercial feeds in place of existing animal diets would save, according to one estimate, 50 kilograms of grain per pig, while shortening the time it takes a pig to reach the standard marketable weight. If China's entire pig production received processed feeds, the savings would be 15 million metric tons annually.97
Table 11--Animal feed in Shanghai
Grain 1965 1975
Percent
Corn 20.0 0.7 Barley 69.0 <25.0 Rice (paddy) 11.4 >75.0
95 - Li Mingyl, "Problems in Supply and Demand for Grain," Reference Materials on Economic Research, No. 33, 1983, p. 10. Tang Mingfeng, "Estimates and Policy," P. 45, places animal consumption of grain at 32.7 million metric tons.
96 Li Mingyi, "Problems in Supply and Demand for Grain," Reference Materials on Economic Research, No. 33, 1983, p. 20.
97 "State Hopes It Can Triple Feed Output," China Daily, Oct. 31, 1987.
36 While feed production has increased, it still falls short of meeting feed demand, which in 1986 was 60 million tons. It would appear that most of the difference between demand and supply is met by the use of unprocessed grain. If so, direct feeding of grain to animals has probably increased significantly in the first half of the 1980's.
Residual Preference for Self-Sufficiency
In addition to constraints of transport, pricing, and lower level bureaucracy to the interregional movement of grain, a residual preference remains with provincial and local planners for the ideal of self-sufficiency in food grain supplies. Perhaps, in time, this preference would recede if markets were better developed and appeared to offer a fully reliable source of external supply. This preference may stem partly from the famine years of the early 1960's, when tens of millions of people died from starvation and related diseases. The costs of reliance on outside grain, whether from international or domestic sources, may be perceived as too great. The preference for self- sufficiency is still articulated at every level, from the country as a whole to the county level. All manners of reasons are advanced against relying on external supplies of grain.
Two researchers in the Office of Regional Planning, Chinese Academy of Agricultural Sciences, advocate that regional cropping patterns and the regional structure of grain output should be readjusted to reduce regional surpluses and shortages. The northeast is advised to reduce its corn acreage and increase its rice acreage, seemingly ignoring the possibility that large expansion of the region's corn production may reflect peasant household income maximizing. Peasants are now more free to determine their cropping patterns than at any time in recent decades, and may simply be exercising their comparative advantage in corn production. Researchers suggest that areas in the middle and lower reaches of the Yangtze River should shift more cultivated land into wheat, coarse grains, and beans. Grain- deficit provinces, and even Beijing, Tianjin, and Shanghai, are urged to establish commodity grain bases so that they can raise their degree of self-sufficiency. Again, this ignores the fact that many farmers in periurban areas find it to their economic advantage to produce vegetables and other higher value-added crops for nearby urban markets.
A recent debate on how to deal with the growing grain deficit of the three coastal provinces in southeast China (Fujian, Guangdong, and Guangxi) also reflects the continuing dominance of the ideology of self-sufficiency. These three provinces in the late 1980's have become the region with the largest grain deficit (Appendix 2). Collectively, these provinces require about 7.5 million metric tons of cereal each year. Given the high population density of these provinces, peasants in the region have increasingly turned to higher valued commercial crops (such as sugarcane, fruits, vegetables, and other crops) and away from grain. Marketing these crops as far away as north China has allowed the region to exploit its comparative advantage, which
37 stems from the region's subtropical climate. But compared with the early 1980's, the region's dependence on externally produced grain has risen sharply. Fujian's needs have tripled to 1.9 million metric tons; Guangdong's and Guangxi's demand roughly quadrupled to 4 million and 1.7 million metric tons.
In a 1985 debate about whether the region should rely on producing or buying grain, the majority favored self-sufficiency over pursuit of comparative advantage, or giving full play to the region's subtropical climate by developing cash crops and agricultural crops with export potential, both of which could achieve high economic results. The predominant views were: that grain is a special commodity (teshu shangpin); that, at times, grain could not be purchased even if one had the money; and that even if one is able to buy grain, one may not be able to buy enough or be able to transport it to where it is needed in a timely manner. Thus, the safe approach is to: stabilize the area used for grain production; emphasize single-crop production; be basically self-sufficient; and bring in only a small amount of grain from the outside.98
In other provinces, self-sufficiency is not only held up as an ideal, but also is a specific objective of economic policy. In Shanxi, which is a modest net recipient of grain from other provinces (Appendix 2), detailed plans have been set forth to achieve a 3.2-percent average annual growth rate of grain output from 1985 to the end of the century. 99 At that rate, production would be above 13 million metric tons, and the province would achieve basic self-sufficiency, or complete grain self- sufficiency in rural areas and a minimum of 80 percent of the grain consumption of urban residents met by provincial production. If the rate of growth in grain production is only 2.6-2.7 percent on average, the province's output would only be 12 million metric tons, and Shanxi would have a grain shortfall of 1.5 million metric tons.
A similar plan was developed in Yunnan, which is striving to achieve food grain self-sufficiency by 1990, according to the loo province's vice governor. Guangxi, which became increasingly dependent on external supplies of grain after grain production fell in 1983-86, has also advanced detailed policies to attain loi self-sufficiency. The governor of Gansu cites agriculture as the major problem to be solved to assure the continued development of the province. While he notes approvingly the new
98 Lai Yuzhong, Liu Xianpeng, and Li Hu, "How to Get Out of the Grain Shortage Predicament; An Investigation of the Grain Problem of Guangdong, Fujian, and Guangxi," Economic Reference, Aug. 26, 1988, p. 22.
99 Wei Yulin and Gao Laisheng, "Reflections on Shanxi's Grain Problem," Economic Problems, No. 1, 1987, pp. 15-18.
- 100 Ll Wan, "Yunnan's 1990 Goal: Feeding Self," China Daily, June 30, 1982.
101 Zhou Jian, "Regional Problems of Grain Economics," Problems of Agricultural Economics, No. 10, 1986, pp. 32-33.
38 patterns of agricultural production and marketing, in which Gansu supplies about 200,000 tons annually of melon, fruit, and vegetables to more than 20 different eastern cities and provinces, he places top priority on ending Gansu's long dependence on grain supplied by the state.102
Conclusions
China's system for the interprovincial transfer of grain appears to have performed very poorly in the first decade of reform. The Central Government's pricing policies created a seemingly permanent disequilibrium, with the demand for extra-provincial grain exceeding the supply. That led to ongoing negotiations that were extremely contentious between the central government and the provinces. And, as in the case of Jilin, when large local surpluses emerged, the central government responded only to a crisis, and then quite inadequately. Despite its location in the area of most dense rail development, the center was unable to arrange for the transfer of more than a small share of the surplus. And, it appears that most of the grain sold went to international markets. That may partly reflect the desire of provincial authorities to earn foreign exchange. But while Jilin was exporting corn, China imported large amounts of corn, particularly in 1982, 1983, and 1986.
This example points to the more general problem: the apparent incoherent nature of import decisionmaking regarding grain. As noted earlier, the Central Committee decided in 1978 to step up grain imports. But as domestic grain production soared beyond expectations in the early 1980's, these import plans seem to have been readjusted very slowly. An official of the Ministry of Commerce wrote a series of articles criticizing grain imports during a period of rising domestic surpluses. The net import of 50 million tons of grain in 1980-83 was partly added to stocks, exacerbating an existing severe storage problem.103 As a result of an inability to move grain interregionally, huge quantities of grain were wasted in the first half of the 1980's.
The Central Government, recognizing these problems, has taken several important steps to reduce the role it plays in the market for grain, including: shedding the responsibility guaranteeing food grains at fixed prices to producers of noncereal crops (except possibly in the case of sugarcane and sugar beet growers); forcing most food processors and industrial users of grain to purchase products on the market; reducing the share of grain purchased from producers at fixed prices; and seeking to enhance the role of the market, particularly through the increased use of negotiated-price grain. And, beginning in 1987,
102 Zhao Duan, "How Can Gansu, which is both Poor and Rich, Rise Up?--An Interview with Jia Zhijie, Governor of Gansu Province," Economic Reporter, No. 22, 1988, pp. 30-31, in Foreign Broadcast Information Service, China-Daily Report, Sept. 7, 1988, pp. 28-30.
103 Ding Shenjun, "Several Measures on China's Current Grain Production," Agricultural Technical Economics, No. 1, 1985, p. 14; "A Theoretical Inquiry into a Strategy for Developing Grain in China," Theoretical Monthly, No. 3, 1986, reprinted in Agricultural Economics, No. 4, 1986, p. 166.
39 the Central Government took a major step by discontinuing its previous policy of supplying fixed quantities of grain to regions where provincial government obligations to sell grain exceed local grain procurement. Instead, the Central Government provided a fixed financial subsidy, but left the deficit region to negotiate with surplus regions to enter into contracts to supply grain at a mutually agreed-to price. If this new initiative is successful, it will end the decades-long disequilibrium situation, where price disparities assured that the demand for centrally sponsored transfer grain exceeded the supply of such grain available to the Central Government. It will also force deficit regions to explicitly compare the costs of increasing procurement locally with the cost of bringing in grain from external sources. The previous problem, of potentially undercutting incentives for increased local production by making available low-priced transfer grain, should be reduced.
While these policy changes seem desirable, it is not clear whether more or less grain will flow interregionally compared with the recent past. Substantially higher prices paid for inward transfers could bring down the level of interregional flows of grain below those occurring prior to 1987. However, if the real constraint in the past has been the limited supply of grain available for transfer, the higher prices received by supplying regions could increase the desired level of interprovincial transfers. Whether the constraints of storage and transport could be eased sufficiently to accommodate that increased level of transfer is not clear.
40 Appendix 1: Notes on Interprovincial Grain Transfer Data
Although there is no single source describing the basis for compiling interprovincial grain transfer data, several points emerged from an analysis of the fragmentary sources that discuss these transfers.
1. Data are compiled on both outward transfers (diaoqu) and inward transfers (diaoru) of grain. Grain leaving a province falls in the outward transfer category, whereas grain entering a province is recorded as an inward transfer. Data on outward transfers generally do not distinguish between grain destined for international markets and those destined for domestic markets. Similarly, inward transfers of grain do not usually differentiate between domestically produced and foreign grain. Because of international trade in cereals, inflows are not equal to outflows. Because inward (outward) transfers include grain purchased (sold) abroad, total provincial inflows (outflows) .will exceed provincial outflows (inflows) when China is a net purchaser (seller) of cereals on the international market.
Data on outward transfers are more frequently found in available journals than are data on inward transfers. For some years, data on both flows are available for several years over the past three decades (app. table 1).
These data appear to be roughly consistent with China's participation in international grain markets in 1953 and 1979. In 1953, China's grain exports were reported to have been 1.8 million metric tons, just over half the difference between the reported outflow and inflow data. In 1965, 1978,. 1979, 1981, and 1982, China was a net importer of cereals. The officially reported net imports of 4.00, 6.95, 10.70, 12.84, and 16.15 million metric tons are only very roughly consistent with the excess of inflows over outflows.
The causes of the discrepancies in the data are not clear. The transfer data may be calculated on the basis of the procurement year (generally July 1 of the year in question through June 30 of the following year in the 1950's, and from April 1 of the given year to March 31 of the following year in the 1970's and 1980's), while the trade data are compiled on a calendar-year basis. A
Appendix table 1--Provincial grain flows, selected years
Year Outflows Inflows
Million metric tons
1953 7.85 4.85 1965 4.70 6.55 1978 2.05 9.50 1979 3.25 9.12 1981 1.34 12.03 1982 1.60 12.30
41 second cause may be the treatment of centrally controlled stockpiles. It is not clear how these are treated in the flow data. Provincial grain delivered to the central government but shipped elsewhere for storage may be counted as an outward transfer the year it leaves the province. But, the grain may not be counted as an inflow into the destination province where it is stored until it is allocated by the state for the use of that province. Thus, outflows of domestic grain from surplus provinces could exceed inflows in years in which central government stocks were moved from surplus to deficit regions and inflows of domestically produced grain to deficit provinces could exceed outflows in the years in which the state reduced the stocks it held in deficit regions.
2. Transfer data appear to be quite frequently, and perhaps always, compiled in terms of trade grain. This term is defined in the notes in table 1.
3. Provincial transfer data are compiled in both a gross and net basis, yet all too frequently, data on transfers are published without specifying whether they are net or gross. In many provinces, one variety of grain is transferred out while another flows in. Heilongjiang is a large exporter of cereals, mostly soybeans. But, as is shown in Appendix 2, Heilongjiang receives about a quarter of a million tons of rice annually. Unfortunately, data on outward transfers from the province are not clearly defined. The first two entries for outward transfers, which come from different sources, appear to be in conflict, but might be consistent if the first is gross outflows and the second is net outflows.
4. Some provinces account separately for grain entitlements, for which the central government is responsible. For example, in Appendix 3, Guangxi is shown as a gross exporter of 970,000 metric tons of grain and a net exporter of 673,000 tons of grain in 1979-83. But the source defines net exports as net of 927,500 metric tons of special incentive grain provided by the state to growers of sugarcane, and net of an additional 404,000 tons allocated for high-quality rice. If these two categories are treated like other inflows, then Guangxi received a net inflow of 658,500 tons of grain in 1979-83.
42 Appendix 2: Interprovincial Inward Grain Flows, Selected Years
Province Period Nature of flow
Fujianl 1961 109,500 metric tons 1961-65, cumulative 514,000 metric tons 1980 1,150,000 metric tons In recent years (1985) 600,000 metric tons annually 1985 907,500 metric tons, including imports ca. 1988 1,900,000 metric tons annually 2 Hebei 1979 1,250,000 metric tons 1982-84 1,450,000 metric tons of wheat; unspecified quantities of rice, wheat, and soybeans 1984 1,144,000 metric tons gross 1,044,500 metric tons net 1985 952,600 metric tons gross 619,200 metric tons net 3 Henan 1965 775,000 metric tons 4 Shandong 1965 250,000 metric tons 5 Guangdong 1978 200,000 metric tons of rice 1978-83 More than 1,000,000 metric tons annually 1984 More than 1,500,000 metric tons ca. 1988 4,000,000 metric tons annually 6 Sichuan 1976 600,000 metric tons (corn and sorghum) 7 Zhejiang 1976 150,000 metric tons 8 Shaanxi 1962 390,000 metric tons 1967 78,000 metric tons 1968 186,000 metric tons 1969 124,500 metric tons 1970 183,500 metric tons 1971 596,000 metric tons 1972 218,500 metric tons 1973 81,500 metric tons 1977 76,000 metric tons 1978 312,500 metric tons 1979 13,000 metric tons 1980 673,000 metric tons 1981 635,500 metric tons 1982 28,000 metric tons
Tianjin9 1953 783,000 metric tons 1978 1,255,000 metric tons 1979 1,025,000 metric tons 1980 1,240,000 metric tons 1983 1,557,000 metric tons 1984 1,415,000 metric tons 1985 1,771,000 metric tons 1986 2,040,000 metric tons 10 Liaoning 1979 1,100,000 metric tons net 1980 1,390,000 metric tons net 1982 1,760,000 metric tons net 1983 2,155,000 metric tons net 1984 1,660,000 metric tons net 1986 1,480,000 metric tons net 11 Gansu 1960 58,500 metric tons 1961 164,500 metric tons 1962 137,500 metric tons 1963 199,500 metric tons 1964 145,500 metric tons 1965 53,500 metric tons 1966 210,500 metric tons 1967 230,000 metric tons 1968 125,000 metric tons 1969 149,500 metric tons 1970 137,000 metric tons
43 Appendix 2: Interprovincial Inward Grain Flows, Selected Years--Continued
Province Period Nature of flow
1971 124,500 metric tons 1972 119,500 metric tons 1973 302,000 metric tons 1974 369,000 metric tons 1977 264,000 metric tons 1978 337,500 metric tons 1979 739,000 metric tons 1980 582,500 metric tons 1981 826,500 metric tons 1982 703,000 metric tons 1983 285,500 metric tons 1984 119,500 metric tons 1985 69,500 metric tons 1986 293,000 metric tons 1987 752,000 metric tons
Shanghail2 1953 1,239,000 metric tons 1958 1,323,500 metric tons 1959 1,573,000 metric tons 1960 1,488,000 metric tons 1961 1,330,000 metric tons 1962 1,306,400 metric tons 1963 1,481,200 metric tons 1964 1,455,000 metric tons 1965 1,336,000 metric tons 1966 1,406,700 metric tons 1967 1,273,500 metric tons 1968 1,563,300 metric tons 1969 1,084,500 metric tons 1970 1,044,500 metric tons 1971 1,480,500 metric tons 1972 1,459,000 metric tons 1973 1,689,000 metric tons 1974 1,489,000 metric tons 1975 1,380,000 metric tons 1976 1,607,500 metric tons 1977 1,905,500 metric tons 1978 1,358,000 metric tons 1979 1,190,050 metric tons 1980 870,500 metric tons 1981 1,442,500 metric tons 1982 1,247,500 metric tons 1983 1,342,500 metric tons 1984 1,550,500 metric tons 1985 2,041,700 metric tons 1986 1,853,700 metric tons 1987 1,481,500 metric tons -- 13 Beijing 1949 413,920 metric tons 1953 722,500 metric tons 1957 847,680 metric tons 1965 1,067,860 metric tons 1978 1,511,540 metric tons 1979 1,425,000 metric tons 1980 1,653,920 metric tons 1981 1,670,395 metric tons 1982 1,740,185 metric tons 1983 1,836,560 metric tons 1984 1,832,370 metric tons 1985 2,090,640 metric tons 1986 2,159,835 metric tons 1987 1,872,158 metric tons
Xinjiang14 1972-83 1,750,000 metric tons 1980 200,000 metric tons
Inner 1970 250,000 metric tons 5 Mongolia1 1979 1,000,000 metric tons 1969-82 13,150,000 metric tons
44 Appendix 2: Interprovincial Inward Grain Flows, Selected Years--Continued
Province Period Nature of flow
1980 1,750,000 metric tons, the year of the greatest inflow 1986 931,000 metric tons 1987 1,493,000 metric tons 16 Yunnan 1980 500,000 metric tons 1981-85 More than 300,000 metric tons/year 1985 535,000 metric tons 1986 600,000 metric tons planned 1986 875,000 metric tons 17 Heilongjiang 1971-77 1,040,000 metric tons of rice 8 Guizhoul in recent years (1980) 500,000 metric tons/year 1980 500,000 metric tons 1982 538,025 metric tons 1983 460,675 metric tons 1984 665,620 metric tons 1985 More than 1,000,000 metric tons rice, corn, sorghum, and wheat 19 Anhui 1954 530,000 metric tons, the all time record 1961 37,000 metric tons net 1966 67,500 metric tons net 1978 278,500 metric tons net 20 Jiangsu recent years 800,000 metric tons 1986 250,000 to 500,000 metric tons of corn; 100,000 metric tons of soybeans; 67,000-100,000 metric tons of sweet potatoes 21 Guangxi 1953 28,500 metric tons 1954 57,600 metric tons 1955 72,200 metric tons 1956 173,600 metric tons 1957 190,900 metric tons 1958 44,800 metric tons 1959 53,500 metric tons 1960 42,700 metric tons 1961 72,100 metric tons 1962 85,700 metric tons 1963 216,600 metric tons 1964 80,200 metric tons 1965 57,700 metric tons 1966 135,000 metric tons 1967 40,900 metric tons 1968 79,100 metric tons 1969 80,200 metric tons 1970 55,600 metric tons 1971 89,600 metric tons 1972 140,700 metric tons, 1973 153,700 metric tons 1974 145,800 metric tons 1975 90,900 metric tons 1976 230,800 metric tons 1977 246,300 metric tons 1978 230,700 metric tons 1979 179,200 metric tons 1980 358,900 metric tons 1981 295,900 metric tons 1982 416,400 metric tons 1983 359,000 metric tons 1984 386,700 metric tons 1985 842,900 metric tons 1986 1,179,000 metric tons ca. 1988 1,700,000 metric tons annually 22 Shanxi 1980 987,000 metric tons gross 836,000 metric tons net
45 Appendix 2: Interprovincial Inward Grain Flows, Selected Years--Continued
Province Period Nature of flow
1984 1,133,000 metric tons gross, including 971,000 metric tons wheat, 835,000 metric tons net 1985 1,054,000 metric tons gross, including 913,000 metric tons wheat, 587,000 metric tons net 23 Qinghai 1953 4,500 metric tons 1979 175,000 metric tons 1980 250,000 metric tons
Ningxia24 1980 125,000 metric tons 25 Tibet 1980 30,000 metric tons
Sources:
1 Fujian Economic Yearbook 1985, (Fuzhou: Fujian People's Publishing House, 1985), p. 244; Fujian Economic Yearbook 1986, (Fuzhou: Fujian People's Publishing House, 1986), p. 295; Li Mintang, Cai Ziging, Lin Bao, and Sun Huan, "We Must Attach Extreme Importance to Our Province's Grain Production," Academic Monthly, 1985, No. 5, reprinted in Agricultural Economics, No 12, 1985, p. 107; Lai Yuzhang, Liu Xianpeng, and Li Hu, "How to Get Out of the Grain Shortage Predicament; An Investigation of the Grain Problem of Guangdong, Fujian, and Guangxi," Economic Reference, Aug. 26, 1988, p. 2. 2 Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 9, 1985, p. 36; Wong Ailin and Wang Zhenmin, "Readjust the Distribution of Crops; Emphasize the Development of Grain Production," Commercial Economics Research, No. 6, 1985, reprinted in Agricultural Economics, No. 1, 1986, p. 182; Hebei Statistical Bureau, Hebei Economic and Statistical Yearbook 1986 (Qinhuangdao: Chinese Statistical Publishing House, 1986), p. 507; Hebei Economic and Statistical Yearbook 1985 (Qinhuangdao: Chinese Statistical Publishing House, 1985), p. 500.
3 Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 9, 1985, p. 36. 4 Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 9, 1985, p. 36.
5 Chen Mao, "Grain Production Should be Placed in an Important Position: Guangdong," Economic Daily, Oct. 29, 1985, p. 1; Guangdong Economics Society, An Economic Investigation of Guangdong (Guangzhou: Guangdong People's Publishing House, 1981), p. 195; Lai Yuzhang, Liu Xianpeng, and Li Hu, "How to Get Out of the Grain Shortage Predicament; An Investigation of the Grain Problem of Guangdong, Fujian, and Guangxi," Economic Reference, Aug. 26, 1988, p. 2. - 6 Dal Maoan, Grain Production Economics (Beijing: Agricultural Publishing House, 1982), p. 28; "Sichuan's Total Grain Output Breaks Through 40 Million Tons," People's Daily, Mar. 17, 1984. 7 Dai Maoan, Grain Production Economics (Beijing: Agricultural Publishing House, 1982), p. 28. 8 A Review of the Situation in Shaanxi (Xian: Shaanxi People's Publishing House, 1986), pp. 515-16. This series is the shortfall of local procurement, compared with local sales. If the province draws down (adds to) inventories, actual inflows would be less (more) than shown. But, the differences in most years would be small. For example, in 1980, the actual inflow was 630,000 tons, implying that inventories fell by 43,000 tons. Conversely, in 1981, the inflow was 772,000 tons, implying that inventories rose 136,500 tons. General Shaanxi Provincial Rural Diversification Investigation Group, "We definitely Cannot Slacken Grain Production as We Enthusiastically Develop Diversification," Reference Materials on Economic Research, No. 33, 1983 p. 32.
Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 9, 1985, p. 36; Tianjin Statistical Bureau, Tianjin Statistical Yearbook 1986 (Tianjin: Chinese Statistical Publishing House, 1986) pp. 318-19; Tianjin Statistical Yearbook 1985 (Tianjin: Chinese Statistical Publishing House, 1985), p. 164; Tianjin Statistical Yearbook 1987 (Tianjin: Chinese Statistical Publishing House, 1987), p. 221.
10 Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 9, 1985, p. 36; Liaoning Economic and Statistical Yearbook 1985 (Beijing: Chinese Statistical Publishing House, 1985), p. 215; Liaoning Economic and Statistical Yearbook 1986 (Beijing: Chinese Statistical Publishing House, 1986), p. 232; Liaoning Economic and Statistical Yearbook 1987 (Beijing: Chinese Statistical Publishing House, 1987), p. 210.
46 11 Gansu Statistical Bureau, Gansu Statistical Yearbook 1987 (Beijing: Chinese Statistical Publishing House, 1987), p. 306; Gansu Statistical Yearbook 1988 (Beijing: Chinese Statistical Publishing House, 1988), pp. 386-87. 12 Shanghai Statistical Bureau, Shanghai Statistical Yearbook 1983, P. 250; Shanghai Statistical Yearbook 1986, p. 304; Shanghai Statistical Yearbook 1988, p. 291.
13 Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 9, 1985, p. 56; Beijing Statistical Bureau, Beijing Municipal Economics and Statistical Yearbook 1985 (Beijing: Chinese Statistical Publishing House, 1985), p. 344; Beijing Municipal Economics and Statistical Yearbook 1986 (Beijing: Statistical Publishing House, 1986), p. 426; Beijing Municipal Economics and Statistical Yearbook 1988 (Beijing: Statistical Publishing House, 1988), p. 450; Beijing Municipal Statistical Yearbook 1982, p. 219; A Prospering Beijing--The National Economic and Social Development of Beijing in the Last 35 Years (Beijing: Beijing Publishing House, 1984), pp. 324-25. For all years except 1953 and 1959, which are given directly in Li Siheng, the data are calculated as the difference between the municipal government's grain sales and grain procurement within the municipality. Thus, the data underestimate (overestimate) inflows in yes during which there were additions to (drawdowns of) municipally controlled grain stocks. "I "Xinjiang Commodity Outflows Greatly Exceed Inflows," People's Daily, Nov. 7, 1986; Zhu Rong, "Important Experiences and Lessons from China's First Thirty Years of Agricultural Development," A Collection on Agricultural Economics 1981, No. 4, p. 10. 15 Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 4, 1981, p. 56; Li Wenjin and Zhao Shouhe, "On Inner Mongolia's Grain Problem," Economics and Society, No. 6, 1985, reprinted in Agricultural Economics, No. 2, 1986, pp. 171-72; Inner Mongolia Statistical Bureau, 'Inner Mongolia Statistical Yearbook 1988, p. 310. 16 Zhu Rong, "Important Experiences and Lessons from China's First Thirty Years of Agricultural Development," A Collection on Agricultural Economics, 1981, No. 4, p. 10; Li Wen, "Yunnan's 1990 Goal: Feeding Self," China Daily, June 30, 1987; Sun Guoqi, "It Is Imperative To Reform the Grain Financial Management System," Bulletin of the Yunnan Finance and Trade College, No. 4, 1986, reprinted in Commercial Economics and Commercial Enterprise Management, No. 3, 1987, p. 124; Shen Chaoda, "Increase Inputs in Agriculture and Promote Agricultural Development," Exploration of Economic Problems, No. 6, 1988, pp. 34-36.
17 Yin Yingchun, "The Law of Value and Rice Production in Heilongjiang," A Collection on Agricultural Economics, No. 6, 1980, reprinted in Agricultural Economics, No. 2, 1981, p. 123. 18 Pan Zhifu, "Several Important Existing Problems in China's and Guizhou Province's Economic Structure and Their Causes," Guiyang Teachers College Bulletin, No. 4, 1984, reprinted in National Economic Planning and Management 1981, No. 1, p. 76; Zhu Rong, "Important Experiences and Lessons from China's First Thirty Years of Agricultural Development," A Collection on Agricultural Economics, No. 4, 1981, p. 10; Guizhou Annual 1985 (Guiyang: Guizhou People's Publishing House, 1985), pp. 597-98; Wang Rongxiang, "Guizhou's Inward Grain Transfers are 2,000 Million Jin," Economic Reference, Mar. 2, 1985. 19 The Situation in Anhui Province 1949-1983 (Hefei: Anhui People's Publishing House, 1985), pp. 620-22; Anhui Economic Yearbook 1984 (Hefei: Anhui People's Publishing House, 1984), p. 280; Wang Yuzhao, "Proceed from Reality, Take the Road of China's Experiment in Developing Agriculture," Problems of Agricultural Economics, No. 10, 1983, p. 4. 20 "An Estimate of This Year's Grain Production and Sales in Jiangsu," Economic Reference, Oct. 2, 1986, p. 4.
21 Guangxi Autonomous Region Statistical Bureau, Guangxi Statistical Yearbook 1987 (Beijing: State Statistical Publishing House, 1987), pp. 218-21; Lai Yuzhang, Liu Xianpeng, and Li Hu, "How to Get Out of the Grain Shortage Predicament; An Investigation of the Grain Problem of Guangdong, Fujian, and Guangxi," Economic Reference, Aug. 26, 1988, p. 2.
22 Shanxi Economic Yearbook 1986 (Taiyuan: Shanxi People's Publishing House, 1986), p. 195. 23 Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 4, 1981, p. 36; Zhu Rong, "Important Experiences and Lessons from China's First Thirty Years of Agricultural Development," A Collection on Agricultural Economics, No. 4, 1981, p. 10. 24 Zhu Rong, "Important Experiences and Lessons from China's First Thirty Years of Agricultural Development," A Collection on Agricultural Economics, No. 4, 1981 p. 10. 25 Zhu Rong, "Important Experiences and Lessons from China's First Thirty Years of Agricultural Development," A Collection on Agricultural Economics, No. 4, 1981 p. 10.
47 Appendix 3: Interprovincial Outward Grain Flows, Selected Years
Province Period Nature of flow
Heilongjiang1 1949-78 32,350,000 metric tons 1949-85 32,520,000 metric tons 1949-83 30,225,000 metric tons 1949-83 31,150,000 metric tons 1953-57 1,400,000 metric tons per year 1958-62 850,000 metric tons per year 1979 400,000 metric tons 1953-83 23,310,000 metric tons, cumulative net over 31 years. There were net exports in 28 years, 1 year with no flows, and 2 years of inflows.
Liaoning2 1985 360,000 metric tons
Jilin3 1950-85 8,975,000 metric tons gross, exclusive of international exports 1950-57 5,769,000 metric tons gross, exclusive of international exports 1958-80 1,500,000 metric tons gross, exclusive of international exports 1981-85 1,706,000 metric tons gross, exclusive of international exports 1986 4,300,000 metric tons
Henan4 1977 400,000 metric tons
Shandong5 1976 500,000 metric tons
Anhui 6 1953 658,500 metric tons net 1955 669,000 metric tons net 1956 52,000 metric tons net 1957 773,000 metric tons net 1958 721,500 metric tons net 1959 462,500 metric tons net 1960 260,000 metric tons net 1962 212,000 metric tons net 1963 100,000 metric tons net 1964 364,500 metric tons net 1965 333,500 metric tons net 1967 97,000 metric tons net 1968 524,000 metric tons net 1969 34,500 metric tons net 1970 443,500 metric tons net 1971 357,000 metric tons net 1972 269,000 metric tons net 1973 563,500 metric tons net 1974 508,500 metric tons net 1975 485,500 metric tons net 1976 658,500 metric tons net 1977 536,500 metric tons net 1979 956,500 metric tons net 1980 364,500 metric tons net 1981 567,000 metric tons net 1982 1,214,000 metric tons net 1983 37,000 metric tons net 1981-85 7,500,000 metric tons net, mostly rice and wheat
Xinjiang7 1986 503,000 metric tons, of which 275,000 metric tons went to Shaanxi, Gansu, and Qinghai 1985-88 950,000 metric tons of wheat and corn 1988 250,000 metric tons of wheat and corn planned 1989 300,000 metric tons planned 8 Guangxi 1953-78 5,742,000 metric tons gross 2,847,000 metric tons net or 109,500 metric tons per year 1978 25,000 metric tons of rice 1979-83 970,000 metric tons gross 673,000 metric tons net or 134,500 metric tons per year
48 Appendix 3: Interprovincial Outward Grain Flows, Selected Years
Province Period Nature of flow
1953-83 13,980,000 metric tons,cumulative net over 31 years; one of two provinces that was a net exporter in every year during this period
Hunan9 1978 500,000 metric tons of rice
Hubei 10 1978 300,000 metric tons of rice
Jiangsu 10 1978 350,000 metric tons of rice
Zhejiangl° 1978 100,000 metric tons of rice
Inner 1949-68 5,300,000 metric tons cumulative Mongolia11 1953 840,000 metric tons 1954 1,000,000 metric tons, the year of greatest outflow
Jiangxi 12 1953-83 13,635,000 tons, cumulative net over 31 years; one of two provinces that was a net exporter in every year during this period 1985 More than 250,000 metric tons 13 Sichuan 1953-83 17,970,000 metric tons, cumulative net exports over 31 years, there were net exports in 24 of these years, no flows in 3 years, and net imports in 4 years. 1957 2,920,000 metric tons, the all time record for annual exports 1953-57 1,650,000 metric tons per year 1958-62 1,200,000 metric tons per year
Gansu14 1957 190,500 metric tons 1958 189,000 metric tons 1959 130,500 metric tons 1975 15,000 metric tons 1976 39,500 metric tons
Shaanxi 15 1953 378,000 metric tons 1954 473,000 metric tons 1955 293,000 metric tons 1956 87,500 metric tons 1957 11,500 metric tons 1958 146,000 metric tons 1959 181,000 metric tons 1960 41,500 metric tons 1961 96,000 metric tons 1963 70,500 metric tons 1964 8,000 metric tons 1965 21,000 metric tons 1966 54,000 metric tons 1974 143,000 metric tons 1975 226,000 metric tons 1976 9,000 metric tons 1983 200,000 metric tons
Sources:
1 Ma Hong and Sun Shangqing, Research on Problems in China's Economic Structure (Beijing: People's Publishing House, 1981), p. 680; Xue Changrong, "Price Reform and the Development of Regional Economic Superiority," Price Theory and Practice, No. 4, 1986, p. 24; The Northeast Economic Region Statistical Yearbook (Shenyang: Chinese Statistical Publishing House, 1986), p. 80; Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 4, 1981, p. 56; Conditions in Heilongjiang Province (Harbin: Heilongjiang People's Publishing House, 1986), p. 637; China's Current Grain Work, (Beijing: Chinese Social Science Publishing House, 1988), p. 263.
2 Liaoning Economic and Statistical Yearbook 1986, p. 233.
3 Xinhua Domestic Service, Oct. 28, 1987, quoting interview with Secretary of Jilin Province CPC Committee, in Foreign Broadcast Information Service, Daily Report-China, Oct. 30, 1987, p. 29; The Situation in Jilin Province (Changchun: Jilin People's Publishing House, 1987), p. 388.
49 4 . L1 Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 4, 1981, p. 36. 5 - Li Slheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 4, 1981, p. 36.
6 Conditions in Anhui Province: 1949-1983 (Hefei: Anhui People's Publishing House, 1985), pp. 620-22; Foreign Broadcast Information Service, Daily Report-China, Dec. 16 1985, quoting Xinhua, Dec. 12 1985; Hefei, "Grain Champions," China Daily, Dec. 18, 1985; Wang Yuzhao, "Proceed From Reality, Take the Road of China's Experiment in Developing Agriculture," Problems of Agricultural Economics, No. 10, 1983, p. 4; Anhui Economic Yearbook 1984, p. 281. 7 "Xinjiang Transfers Out More than 500,000 Tons to Support Shanxi, Gansu, Qinghai, and Other Provinces," People's Daily (overseas Chinese edition), Mar. 25, 1987; "Xinjiang Commodity Outflows Greatly Exceed Inflows," People's Daily, Nov. 7, 1986; Foreign Broadcast Information Service, China-Daily Report, Nov. 9, 1988, p. 68, quoting Xinhua Domestic Service (in English), Jan. 27, 1988, p. 68.
8 Guangdong Economics Society, An Economic Investigation of Guangdong (Guangzhou: Guangdong People's Publishing House, 1981), p. 195; The Situation in the Guangxi Autonomous Region (Nanning: Guangxi Nationality Publishing House, 1985), p. 376.
9 China's Current Grain Work (Beijing: Chinese Social Science Publishing House, 1988), p. 262; Guangdong Economics Society, An Economic Investigation of Guangdong (Guangzhou: Guangdong People's Publishing House, 1981), p. 195.
10 Guangdong Economics Society, An Economic Investigation of Guangdong (Guangzhou: Guangdong People's Publishing House, 1981), p. 195. 11 Li Wenjin and Zhao Shouhe, "On Inner Mongolia's Grain Problem," Economics and Society, No. 6, 1985, reprinted in Agricultural Economics, No. 2, 1986, pp. 171-72.
12 China's Current Grain Work (Beijing: Chinese Social Science Publishing House, 1988), p. 263; Li Qinyuan and Xiong Tianda "Jiangxi Adjusts the Structure of Rural Production to Guarantee Grain and the Development of Village Industry," People's Daily, June 25, 1985.
13 China's Current Grain Work (Beijing: Chinese Social Science Publishing House, 1988), p. 263; Li Siheng, "Points on China's Grain Situation," A Collection on Agricultural Economics, No. 4, 1981, p. 56; "Sichuan's Total Grain Output Breaks Through 40 Million Tons," People's Daily, Mar. 17, 1984. 14 Gansu Statistical Bureau, Gansu Statistical Yearbook 1987 (Beijing: State Statistical Publishing House, 1987), p. 306; Gansu Statistical Yearbook 1988 (Beijing: State Statistical Publishing House, 1988), p. 386. 15 A Review of the Situation in Shaanxi (Xian: Shaanxi People's Publishing House, 1986), pp. 515-16. These data are the surplus of provincial procurement over provincial sales, and will be greater (less) than actual outflows in years in which provincial inventories rose (fell).
50 List of Chinese-Language Periodical Publications
English Chinese
Academic Monthly Xuexi yuekan Agricultural Economics Nongye jingji Agricultural Technical Economics Nongye jishu jingji
Bulletin of the Yunnan Finance and Trade College Yunnan caimao xueyuan xuebao
China Rural Management Zhongguo nungcun jingying bao Chinese Commerce Zhongguo shangye bao A Collection on Agricultural Economics Nongye jingji congkan Commercial Economics and Commercial Enterprise Shangye jingji, shangye jiye guanli Management Commercial Economics Research Shangye jingji yanjiu
Economic Daily Jingji ribao Economic Information Jingji xiaoxi Economic Problems Jingji wenti Economic Reference Jingji cankao Economic Reporter Jingji daobao Economic Research Jingji yanjiu Economic Review Jingji zongheng Economics and Society Jingji shehui Economics of Finance and Trade Caimao jingji
Finance Caizheng Fujian Forum Fujian luntan
Guiyang Teachers College Bulletin Guiyang shiyuan xuebao
Management World Guanli shijie
National Economic Planning and Management Guomin jingji jihua yu guanli New China Monthly Xinhua yuebao The New Long March Xin changzheng
People's Daily Renmin ribao People's Republic of China State Council Bulletin Zhonghua renmin gongheguo guowuyuan gongbao Population Research Renkou yanjiu Price Monthly Jiage yuekan Price Theory and Practice Jiage lilun yu shijian Problems of Agricultural Economics Nongye jingji wenti
Reference Materials on Economic Research Jingji yanjiu cankao ziliao
Theoretical Monthly Lilun yuekan
*U.S. Government Printing Office 1000 - 261-455/20787
51 UNITED STATES DEPARTMENT OF AGRICULTURE ECONOMIC RESEARCH SERVICE 1301 NEW YORK AVENUE, NW WASHINGTON, DC 20005-4788