Despite rapid growth in agricultural production in the past few decades, China’s agricultural sector faces many challenges. Climate change, water scarcity, land degradation and other environmental stresses, as well as external factors related to trade policies increasingly constrain the potential of agriculture to meet the rising demand for food. Public expenditures are one of the Government’s key tools to shape a conducive policy environment for agricultural production.

In 2013, IFPRI’s China Strategy Support Program team undertook a study to analyze the effectiveness of China’s public expenditures in the agricultural sector. One of the tools used in the study was the Statistics on Public Expenditures for Economic Development (SPEED) database, which has benefited from continued investment from PIM.

The study report, submitted to the Ministry of Agriculture and to the Asian Development Bank, pointed to a low level of agricultural expenditures. Less than 1% of the agricultural GDP was spent on agriculture. There was inadequate public spending on agricultural research and development. The investment in agricultural infrastructure – especially in small infrastructure in rural areas – was insufficient, and the share of the irrigation investments dedicated to farm-level equipments and directly benefiting farmers was small. The returns to subsidies were low, suggesting that these should be reduced.

In 2016, another report containing policy recommendations, co-authored by IFPRI and the University of Victoria, was submitted to the National Development and Reform Commission of China and to the Asian Development Bank. In 2017, a report on reforming the Chinese agricultural R&D system was submitted to the Ministry of Agriculture. In addition, the research team attended several consultations convened by various Chinese government agencies.

Agricultural public expenditure policies in China are currently undergoing changes that are consistent with the team’s recommendations. China’s new Rural Vitalization Strategy emphasizes both public and private investment to support agricultural and rural development. In line with the research recommendations, the government has continued to increase investment to promote agricultural and rural development, and increased investments in R&D, infrastructure, and rural education. Furthermore, input subsidies have not been increased, stockpile policies for corn, oilseeds and cotton have been removed, and the floor price of rice and wheat has been reduced.

Photo by ICRAF.