Agricultural Trade of India and China in the context of WTO

Mithila Biniwale Research Scholar Department of Humanities Social Sciences Indian Institute of Technology Bombay Powai, Mumbai 400 076.

mitsiitb@iitb.ac.in

International Conference on Changing Structure of International Trade & Investment New Delhi

Scheme of the presentation

Introduction Objectives Agricultural Sector reforms of India and China Growth and Trade Performance Of India and China India and China in the World Economy Summing up

Source: www.mapsofindia.com

Source: www.maps-of-china.com

Indicators (2008) Population, total Population growth (annual %) Surface area (sq. km) GDP per capita (constant 2000 US$) GDP growth (annual %) HDI Ranking Share in World GDP (1995-2003)
Source: www.worldbank.org, Jorgenson &Vu (2005)

India 1,139,964,932 1 3,287,260 718 6 134 10.7

China 1,324,655,000 1 9,598,080 1,965 9 99 22.6

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Introduction
During 1994-98 the primary sector of India was brought

under the purview of reforms that aimed at gradually opening agricultural trade flows as a result of signing the Uruguay Round Agreement on Agriculture.
In 2001 Chinas entry in WTO started an attempt of

broad-based liberalisation.
The study compares the agricultural trade performances

of these two countries.

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Objectives
To outline and review main changes in agricultural policies of India

and China. To analyse agricultural trade performances of India and China in the context of WTO

Pre-reform Period India 1950-51 to 1989-90

Post-reform Period 1990-91 to 2007-08

China

1952 to 1977

1978 to 2005

Hypothesis
The sequencing of reform is influential factor

contributing to the differences in agricultural growth and agricultural trade in India and China.

Data Sources
India
Economic Survey of India (Ministry of Finance, Government of India) Agricultural Statistics at Glance (Ministry of Agriculture Government of India)

China
China Statistical Yearbook (National Bureau of Statistics of China) China Agricultural Development Report (Ministry of Agriculture, China)

Comparison of India & China

World Development Indicators (World Bank)

FAOSTAT-Agriculture online statistical service (Food and Agriculture Organisation of United Nations) World Economic Outlook (International Monetary Fund) Commodity Yearbook (UNCTAD)

Handbook of Statistics on Indian Economy (Reserve Bank of India) National Sample Survey Organization (NSSO) various rounds.

www.mospi.nic.in (Ministry of Statistics & Programme Implementation)

www.Indiastat.com (Data net India Pvt.)
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Agricultural Sector Reforms in India : Incremental Approach

Pre-reform period Institutional changes & Land Reforms (1950-51 to mid 1960s)
New Agricultural Strategy of

Phases of Reforms Changing a broad set of policies outside agriculture (1991-94)

Signing of AOA & gradually

Green Revolution (1970s)

Agriculture policy lacked

opening agricultural trade (1994-98)

direction and was marked by Reforms in Domestic confusion. agricultural marketing (1980s) (1998 onwards) (Rao,1966 & Vadiyanathan, 2000)
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Agricultural Sector Reforms in China: Gradualism

Pre-Reform period
Land Reforms and

Phases of Reforms
Major institutional and pricing

Collectivization (1949 - 1956).

Great Leap Forward and

reforms (1978-1984).
Substantial domestic

Communization (1957-1960).
Economic adjustments and

agricultural reforms (1985-1993).

Entry in WTO with an attempt

Cultural Revolution (19611977)

of broad-based liberalization(1994-2001).
Entry of China in WTO

(2001 onwards)
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Overall Agriculture Sector Performance

India
For 'All Crops' there is slowing of growth in area, production & yield in post-reform. High level of diversification. Prices of other commodities are growing faster than prices of farm products. Share in world production & trade shows steady decline. Volatility of prices has increased for major agricultural crops.

China
Between 1978 and 1984, grain, rice & cotton production grown considerably.

Output of livestock & fishery exemplifies the gradual increase.

Income gains of farmers have accumulated due to agricultural marketing reforms. Volatility of prices has increased for major agricultural crops. Share in world production & world trade increased.

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Sector wise GDP Growth in India & China

India
Year Pre-reform 1950-51 to 1964-65 1966-67 to 1972-73 1973-74 to 1979-80 2.5 3.5 1.7 6.7 4.0 5.7 4.7 4.3 5.0 4.0 3.9 3.9 Agricu Second Terti Total lture ary ary

China
Year Agric Seco ultur ndar e y Tertiary Total

Pre-reform

1952 to 1956 1957 to 1960

1961 to 1965 1966 to 1970

6.3 -8.1
10.4 2.7 2.7 4.7 6.6 4.1 3.5 4.8 4.5

15.0 27.0
13.1 6.6 6.4 8.5 8.2 11.3 10.0 11.7 11.9

10.0 13.8
4.9 4.8 3.3 4.4 12.1 9.2 9.6 10.1 10.7

9.9 10.7
9.5 4.8 4.5 5.9 8.8 8.9 8.8 10.2 9.9
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1980-81 to 1989-90
1950-51 to 1989-90 Post-reform 1990-91 to 1993-94 1994-95 to 1997-98 1998-99 to 2008-09 1990-91 to 2007-08

2.9
2.3 3.1 2.8 2.8 2.8

5.8
5.1 3.2 7.3 7.7 6.6

6.7
4.8 5.9 8.7 8.9 8.2

5.1 1970 to 1977

3.8 1952 to 1977 Post-reform 4.3 6.6 1978 to 1984 1985 o 1993 1994 to 2001

7.3 2002 to 2005 6.5 1978 to 2005

Source: Calculations are based on data from www.mospi.nic

Source: Calculations are based on data from China Statistical Yearbook, 2002,2004 & 2008.

Condt.
India
Green Revolution- 3.5 %

followed by 1973-74 to 197980 1.7 %.

In 1990-91 to 2007-08 Total

China Considerable expansion in secondary sector since 1985 10-12 % growth.

Post Reform Period (1978-

GDP growth 6.5 % whereas Agriculture 2.8 %.

In 1990-91 to 2007-08

84) agriculture sector grew 6.6%.

Growth in agriculture

Secondary Sector- 6.6 % & Tertiary 8.2 %.

provided foundationspillover effects in other sectors.

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Trade Performances of India & China

India Imports Pre reforms 1961 to 1970 1971 to 1980 1981 to 1990 Post reforms 1991 to 1999 2000 to 2007 2.4 11.2 -2.8 17.6 13.4 Exports Pre reforms -0.3 1961 to1970 15.3 1971 to 1977 1.2 Post reforms 0.3 24.4 13.1 12.3 China Imports Exports

1978 to 1984
7.7 1985 to 1993 9.2 1994 to 2000 2001 to 2007

2.7
7.7 0.1 23.2

8.4
7.6 -2.3 13.2
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Source: Calculations are based on data from www.fao.org Note: Growth rates are calculated fitting linear trend line to logarithmic values.

India and China in World Economy

Country World 1989-95 India China India & China 40.25
Source: Jorgenson and Vu (2005)

Developing Asia 1995-2003 25.04 52.86

1995-2003 1989-95 10.66 22.58 16.49 49.17

9.95 30.3

33.24

65.66

77.9

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Share of India and China in World Agriculture Production

India China

India Pre-reform

China Pre-reform

1961 to 1970 21.1 1961 to1970 17.2 1971 to 1980 23.2 1971 to 1977 16.2 1981 to 1990 19.0 Post-reform Post-reform 1978 to 1984 22.20 1991 to 1999 13.3 1985 to 1993 42.16 2000 to 2007 13.7 1994 to 2000 53.3 2001 to 2007 57.7
Source: Calculations based on data from www.fao.org 15

Shares of India & China in World's Agricultural Trade

6.0
5.0 4.0 (in %) 3.0 2.0 1.0 0.0 1973 1963 1965

1967

1975

1961

1969

1979

1971

1977

2003

India Imports

India Exports

China Imports

China Exports

Source: Calculations are based on the data from www.fao.org

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2005

1993

1995

1997

1999

1989

1987

2001

1983

1985

1991

1981

Summing Up
Chinas sequencing of reforms help it to improve trade

performance.
Indias liberalisation policy also gave boost to agri-trade. Both the countries show decline in share of agri-exports in

worlds agri-exports especially since 1993-1994.

Major players in production front, they have remained

comparatively minor players in terms of trade in the world.

China has performed better than India in terms of agricultural

growth as well as agri-trade.

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Thank You

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