By Cheng Guoqiang, International Cooperation Department of DRC, & Zhu Mande, School of Economics of Guizhou University

Research Report No 63, 2015 (Total 4748)

Abstract:

In recent years, a series of "amber box" subsidy measures have been taken by Chinese government to protect and mobilize farmers' enthusiasm to grow grains, such as minimum grain purchase prices, temporary purchase and storage, subsidies for purchasing fine seeds and general subsidies for purchasing agricultural supplies. This paper adopts the benchmark set by WTO to estimate China's "amber box" support level. The results show that though China's "amber box” support level has increased fast, it still stays within the scope of “de minimis” in line with WTO domestic support rules for agriculture, without exceeding the top limit of "amber box". Although there is some space for making grain "amber box" support, China is facing the substantial ceiling limit of "de minimis." In future, China could not use price hike to support the stable development of agricultural production, otherwise the policy support will be challenged by international rules. As the risk of price support exceeding the top limit of "amber box" rises increasingly, it is necessary to promote the reform of grain pricing mechanism, explore new-type subsidy policy, break the restrain of "amber box" and at the same time effectively protect and mobilize farmers' enthusiasm to grow grains.