Removal of China’s domestic price trade barriers could increase China’s imports of agricultural commodities
China imported more than $205 billion worth of agricultural products in 2021, including more than $37 billion from the United States, yet trade barriers deterred China’s imports from reaching even higher levels. China’s import barriers create what are called “price wedges,” in which domestic prices for agricultural commodities including beef, corn, pork, and wheat are higher than the world price.
Researchers at USDA’s Economic Research Service recently found that removing these price wedges would lead to increases in agricultural imports for the four commodities over the subsequent 5 to 10 years. For corn and wheat, removing price wedges was estimated to increase China’s imports by 91% and 249%, respectively.
Both of these commodities are subject to a tariff-rate quota which could constrain additional imports. Removal of the beef price wedge was estimated to increase China’s beef imports by 46%, while for pork, it was estimated to increase China’s pork imports by 402%—the largest increase among the commodities considered.
Overall, the benefits of removing these trade barriers would be widespread, increasing sales for producers in the United States and other exporting countries and yielding lower food prices for China’s consumers.