As China becomes a key player in global agro-food markets it is essential to understand the framework that has shaped developments in Chinese agriculture since the introduction of reforms in 1978. This chapter will focus on the processes undertaken since 1990 and identifies the constraints, opportunities and challenges to China’s agricultural development.

China has implemented substantial economic policy reforms since 1978. A fundamental element has been reform of the raft of agricultural and agriculturerelated policies contained in China’s governance framework. While the general direction of reforms has been consistent, there have also been numerous small policy shifts and changes in the detail of policies. In this chapter, trends in agricultural and related policies during the period 1990-2005 are highlighted, followed by an evaluation of the support provided to producers.

This chapter reports analysis on the potential economic impact of reducing China’s agricultural trade protection and domestic support and comparing the effects with those that might accompany widespread reductions in support afforded farmers in OECD countries. Section 3.1 investigates, with the use of an economy-wide general equilibrium model (GTAPEM), the source and size of the sectoral and economy-wide gains to China from multilateral trade liberalisation.

As discussed in Chapter 1, a precondition for closing a large rural-urban income gap in China is a large outflow of labour from agriculture to other sectors of the economy. Moreover, mobile labour is an important factor contributing to China’s welfare gains from multilateral liberalisation. This annex discusses the impact of labour market reforms on rural incomes and poverty