1 Conventional: Unpublished research of Jim Lewek. Garden: National Foreign Assessment Center, CIA, "China: Economic Indicators," October 1977, p. 13.

* Negligible.

SOURCES

Table 9:

1949-75-National Foreign Assessment Center, CIA, "China: Economic Indicators," October 1977, p. 13. 1977-FBIS, Nov. 22, 1977. p. E18.

Table 10:

1949-75-National Foreign Assessment Center, CIA, "China: Economic Indicators," October 1977. p. 13. 1976-77-Unpublished research of Judy Flynn.

Table 11:

1949-57-State Statistical Bureau, "Ten Great Years," Peking, 1960, p. 130.

1963-64-It was reported in 1963 that about of China's cultivated land was irrigated, and that some which had been destroyed by floods had yet to be rebuilt. See SCMP No. 3118, Dec. 12, 1963, pp. 8-10. A Hong Kong source gives a 1964 figure of "nearly 500,000,000 mou," implying that irrigated acreage was less than 33,300,000 hectares. See "Ching-chi T'ao-pao" (Economic Reporter) No. 895, Nov. 16, 1964, p. 20.

1973-Figure for 1973 given to the Water Resources Delegation during their visit the following year. See Nickum, James E., Hydraulic Engineering and Water Resources in the People's Republic of China," p. 51. Stanford, Calif.: United States-China relations program, 1977.

1974-2,000,000 hectares more than in 1973. See FBIS, Dec. 19, 1974, p. El.

1977-Said to be nearly half the arable land, and 3 times the figure for the early post-liberation stage. See FBIS, Sept. 19, 1977, p. E5.

7. Fitted, projected, and actual net wheat and coarse grain imports, 1969-78___

APPENDIX TABLES

Page

653

654

654

659

666

668

655

656

658

659

661

664

665

1. PRC grain trade, by grain, 1961–77.

2. PRC grain imports by country of origin, 1961-76

I. SUMMARY

669 670

The pattern of grain trade of the People's Republic of China (PRC) shifted abruptly in 1961 when China began a large grain import program. Although the PRC has continued to export rice, it has remained a net importer of grains despite slowly rising per capita grain production. During the 1970's, the annual variability of China's grain trade has increased considerably.

Grain imports have become less important in comparison with national grain production, but continue to provide an important part of grain supplies in the urban areas of northern China, as well as adding significantly to the total supply of wheat, a preferred foodgrain. During the 1970's, grain imports have followed fluctuations in per capita production of grains, suggesting that imports have been closely tied to state grain procurements from rural areas in northern China.

China's rice exports have covered a substantial part of the costs of grain imports and the net cost of grain imports has fluctuated far less than the quantity of imports. The level of rice exports appears to be correlated with the cost of the grain import program and to a lesser extent with the level of per capita rice production. But, available information does not provide a full explanation of the determinants of rice exports.

A survey of factors affecting grain import levels suggests that the growth of domestic demand for grains will increase in the future. Increased domestic feedgrain demand for urban livestock raising is also likely. PRC policy appears to favor self-sufficiency in grains, and imports of industrial goods and technology seem to have the highest priority in coming years. Therefore, unless China is successful in increasing the growth rate of grain production and state procurements, pressures will build for higher grain import levels and other economic policy goals will be compromised.

The United States appears at present to be a residual supplier of grain and other agricultural products to the PRC. Until this changes, United States grain exports to China are likely to remain highly variable and substantial on an ongoing basis only if the PRC is unsuccessful in holding down grain import levels.

II. INTRODUCTION

The PRC has been an important but increasingly uncertain element in world grain markets. The variability of PRC exports and imports of grain has increased markedly in the 1970's. Additionally, with the resumption of Sino-U.S. trade in the early 1970's, China has become a potentially important buyer of U.S. grains. But actual U.S. sales have been highly variable, ranging from a peak of 4 million tons in 1973 to none in the 1975-77 period. This recent variability of trade and uncertainty about PRC purchasing intentions increases the need to understand what influences China's grain trading patterns.

The objective of this paper is to describe the past pattern of China's grain trade, to examine the probable determinants of both trends and annual fluctuations in grain imports and exports, and to explore the major forces that will be shaping China's trade in grains in years to come. The PRC has provided neither a full explanation nor the data to make a complete analysis possible. Consequently, past trade behavior cannot be fully explained. Nor is it possible to project future trade levels with any certainty. But it is possible to at least sort out the major factors that are potentially important in determining China's grain trading patterns, to identify some of the variables that seem to have been important in influencing grain trade in the past, and to suggest some of the more important forces at work shaping China's future grain trade.

III. GRAIN TRADE PATTERNS: A DESCRIPTIVE OVERVIEW

The pattern of China's grain trade has varied markedly since 1949. During the 1950's, the PRC was a consistent net exporter of grains. Grain imports during that decade never exceeded 200,000 tons per year, while exports, primarily rice, rose steadily through 1959. Net exports of grain between 1955 and 1960 averaged over i million tons per year (table 1).

This pattern of trade shifted abruptly in 1971, when the PRC began a large-scale program of grain imports following a disastrous decline in foodgrain production which began in 1959 and saw 1960 per capita grain production fall to three-fourths of mid-1950's levels. From 1961 to the present, China has remained a substantial net importer of

grains despite a return of per capita production to close to pre-Great Leap Forward levels by the mid-1960's. Despite large grain imports since 1961, PRC rice exports have continued to be substantial and an important source of foreign exchange earnings.

Grain Imports

Wheat has consistently been the PRC's major imported grain, although substantial amounts of coarse grains and small quantities of rice have been imported in some years. Wheat flour was imported

in 1961 and 1962 but has not been purchased in significant quantities

since then. (See app. table 1 for a breakdown of trade by grain.)

TABLE 1.-PRC GRAIN TRADE, CALENDAR YEARS 1952-77

Sources: Riley H. Kirby. "Agricultural Trade of the People's Republic of China, 1935-69." Foreign Agriculture Economic Report 83, U.S. Department of Agriculture, Economic Resource Service, August 1972. Appendix table I.

Although the Chinese have said little about the end uses of imported grains, most are used for human consumption rather than for feed. Use is largely limited to the major urban areas in coastal northern China where wheat rather than rice is the staple food grain. It, therefore, appears that coarse grains are an inferior substitute for wheat and have thus far been purchased primarily when grain imports are large and foreign exchange pressures severe or wheat unavailable at desired delivery schedules or prices.

During the past, China's grain imports were remarkably stable in comparison with those of other centrally planned economies. Wheat imports during the 1960's averaged 4.7 million tons annually and ranged between 3.9 and 5.7 million tons per year. Combined