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Do State-Owned Enterprises Benefit More from China’s Cereal Grain Tariff-Rate Quota Regime?

Raindrops on research crops planted in Kinston. PHOTO BY ROGER WINSTEAD

ARE Assistant Professor Kathryn Boys co-authored a paper which provides new insights about the dynamics of firm-level participation and importation in China’s wheat, corn, and rice markets.

In 2016, the United States launched a formal dispute with the World Trade Organization (WTO) concerning China’s wheat, corn, and rice tariff-rate quota (TRQs) administration. A formal panel was requested in August 2017, with several major grain exporters, including Canada, joining as third-party members. This study employs two unique micro-level datasets to investigate the role of state-owned and non-state-owned enterprises’ (SOE and non-SOE, respectively) in China’s agricultural imports. Results suggest that SOEs are noticeably more active in importing quota-bound commodities compared to quota-free imported commodities. Moreover, the larger role of SOEs
in China’s cereal grain imports is negatively correlated with China’s food security targets, as measured by estimated prior year stocks-to-use ratios. Conversely, above average food security targets in China’s cereal grain market leads to an important extensive margin adjustment of non-SOE import participation. Finally, the authors found very little compelling evidence that China’s September reallocation of unused TRQ has any economic or statistically significant impact on non-SOE entry into importing or the intensity with which their imports occur.

Read Kathryn’s paper.