china’s income inequality and implications for food trade qingbin wang community development and...
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China’s income inequality and China’s income inequality and implications for food tradeimplications for food trade
Qingbin WangCommunity Development and Applied Economics
The University of Vermont
Outline
Introduction Changes in China’s income & inequality Effects of income on food demand Implications for food trade Conclusions
Introduction
-- China: basic statistics
-- China’s economic reform since 1978 -- Rural reform started in 1978 -- Urban reform started in 1983
-- Transition to a market economic system
-- Impacts of the reform -- Economic growth -- Trade
-- Income and living standard -- Problems and concerns
-- Objectives of this study:
China’s basic statistics in comparison with the U.S.
China U.S. Area 9.6 m. sq. km 9.4 Population 1.3 b. 0.29 Pop. growth since 1990 1% per yr. 1% Per capita GNP in 1998 $750 29,000 Per capita PPP in 1998 $3220 29,000 Index of openness (1980-98) 0.06 - 0.22 0.12 - 0.14 Engel coefficient 0.38 - 0.46 0.12 Economic system ? Market History Economic growth Challenge of agriculture Food market Agricultural policy
China’s exports and imports China’s exports and imports ($ bil)($ bil)
0
50
100
150
200
250
300
350
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
Changes in China’s income & inequality
-- Urban per capita income
-- Rural per capita income
-- Urban-rural income gap
-- Income inequality in urban and rural China
China’s average income: urbanChina’s average income: urban
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Year
Real income in 1990 Yuan
Nominal income
China’s average income: ruralChina’s average income: rural
0
500
1000
1500
2000
2500
3000
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Year
Real income in 1990 Yuan
Nominal income
China’s urban-rural income gapChina’s urban-rural income gap
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Year
Nominal rural income
Nominal urban income
China’s urban-rural income ratioChina’s urban-rural income ratio
1.5
1.7
1.9
2.1
2.3
2.5
2.7
2.9
3.1
3.3
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Year
China’s estimated Gini coefficients
0.14
0.16
0.18
0.2
0.22
0.24
0.26
0.28
0.3
0.32
0.34
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Year
Urban Gini coefficient Rural Gini coefficient
Effects of income on food demand
-- Changes over time: transition from grains to high
value food products (e.g., meats, dairy, fruits, etc.)
-- Evidence from cross-sectional data by income groups
-- A case study: milk and dairy products
Per capita grain consumption
0
50
100
150
200
250
300
1980 1985 1990 1995 2000
Urban
Urban per capita grain consumptionby income groups in 2002
646668707274767880828486
Lowest Low Lowermiddle
Middle Uppermiddle
High Highest
China’s meat production
0
10
20
30
40
50
60
70
Milli
on M
etric
Ton
s
80 82 84 86 88 90 92 94 96 98 00
Pork Beef Mutton Poultry Other meat
China’s milk productionChina’s milk production
01
2
34
5
67
8
910
Milli
on M
etric
Ton
s
80 82 84 86 88 90 92 94 96 98 00
Cow milk Other milk
Urban per capita milk consumptionby income groups in 1998 and 2002
0
5
10
15
20
25
30
Lowest Low Lowermiddle
Middle Uppermiddle
High Highest
Per capita consumption of sour milk and milk powder by income groups in 1998
0
0.2
0.4
0.6
0.8
Lowest Low Lower middle Middle Upper middle High Highest
Income group
Sour milk
Milk pow der
Average number of refrigerators per 100 households in China
0
10
20
30
40
50
60
70
80
90
82 84 86 88 90 92 94 96 98 00
Urban households Rural households
Income distribution and consumptions (Average number of TVs, bicycles and refrigerators per 100 urban households)
0
20
40
60
80
100
120
140
160
180
Lowest Low Lowermiddle
Middle Uppermiddle
High Highest
Implications for food trade
-- China’s food demand and trade behavior are increasingly determined by consumer demand
-- Potentials for U.S. food products in the Chinese market
-- Challenges
U.S. agricultural trade with ChinaU.S. agricultural trade with China
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000Year
Mill
ion
U.S
. Dol
lars
US ag exports to China US ag imports from China
U.S. agricultural exports to China for selected HVPsU.S. agricultural exports to China for selected HVPs
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
U.S
. Dol
lars
Red meat & products Dairy productsOil and fat Poultry & products Vegetables
Number of McDonald’s restaurants in ChinaNumber of McDonald’s restaurants in China
0
100
200
300
400
500
600
1987 1990 1993 1996 1999 2002
Mainland HK Taiwan
Price comparison for pork cuts & variety Price comparison for pork cuts & variety meats in China and the U.S. ($/lb)meats in China and the U.S. ($/lb)
China price U.S. PriceChina price U.S. Price
LoinLoin 1.20 1.20 1.32 1.32
LungLung 0.24 0.24 0.03 0.03
Pork stomachPork stomach 2.16 2.16 0.54 0.54
Pork kidneyPork kidney 1.54 1.54 0.17 0.17
LardLard 0.72 0.72 0.25 0.25
Pork feetPork feet 0.87 0.87 0.20 0.20
Boneless buttBoneless butt 1.20 1.20 0.81 0.81
Nape of neck with boneNape of neck with bone 1.32 1.32 0.10 0.10
Comparison of per capita milk and milk product consumption (kg)
0
50
100
150
200
250
300
China Taiwan S. Korea Japan USA
A survey in Guangzhou in 1996
0% 20% 40% 60% 80% 100%
Canned poultry
Frozen poultry
Processed poultry
Live chichen
Highly prefer Somewhat prefer Don't care Don't like Don't know
0% 20% 40% 60% 80% 100%
They are cheaper
They are worse intaste
They are worse innutrition
They are worse insafety
Agree Disagree Don't know
Conclusions
-- China’s per capita income and income inequality have increased significantly since the reform
-- Food consumptions are closely related to per capita income
-- China’s food market and trade behavior are increasingly determined by consumers
-- There are both potentials and challenges for the U.S. in the Chinese market