1 Introduction
1.1 Research Background and Significance
1.1.1Research Background
Since China's entry into the WTO, China's grain imports have been increasing.Before 2003, China's annual grain imports rarely exceeded 20 million tons, and since2003, China's annual grain imports have exceeded 2013 million tons, and it has beenincreasing year by year. In 1203, China's annual grain import volume exceeded 86million tons, of which cereal imports were 14.585 million tons and total soybeanimports were 63.38 million tons. In 2014, China's grain imports reached a new high,with a total of nearly 100 million tons in the whole year, of which 19.52 million tonswere imported from cereals, while 71.4 million tons were imported from soybeans.
Judging from the proportion of China's grain imports to the world's total grainimports, the proportion of cereals is relatively small, of which rice imports accountfor less than one percent of world rice imports, and wheat and corn imports accountfor Than in inpidual years between 2000 and 2014, more than 5%; and theproportion of soybean imports to the total world soybean imports is growing year byyear, and in 2011 this proportion has exceeded 60%, also That is to say, in the pastfive years, more than 60% of the world's soybean imports have originated in China.
There is also increasing international food prices. In 2008, the growth rate offood prices reached a peak. The annual growth rates of rice, wheat, corn, and soybeanprices were 110.7%, 27.5%, 34.0%, and 36.1%, of which rice Prices have more thandoubled in 2007. From the comparison of data from 2000 to 2014, the price increasesof rice, wheat, corn, and soybeans were 200.5%, 147.9%, 190.4%, and 178.2%,respectively. The price of rice increased the most, followed by corn and soybeans,and finally wheat. .
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1.2 Main research contents,methods and technical routes
1.2.1 Main research contents
Presentation and analysis of the status quo. Mainly analyze the general situationof China's grain import trade, including grain production,The fluctuations inconsumption and imports compare the proportion of imports in total domesticconsumption and the total world imports. Analyze the import concentration andsource structure of grain in China.
Phase relationship analysis. First, a descriptive analysis of domestic and foreignmarket prices of four major food crops, including rice, wheat, corn and soybeans.Based on this, a VAR model is constructed and relevant tests are performed to judgethe relationship between China's grain imports and domestic and foreign marketprices.
Empirical Research. First explain the revised Seed-Marchant-Reed theoreticalframework, according to this framework builds a Seed-Marchant-Reed model. Thenuse this model to measure the buyer's market power of the main food crops in theimport trade market and compare it with the seller's market power of the exportingcountry to determine whether its import trade has a "big country effect". By studyingthe results of the above model, the specific domestic and foreign factors leading tothis result are analyzed and corresponding policy
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2 Literature review
2.1Research onthe "Great Power Effect" of China's Grain Import
The theory of the "big country effect" was used to explain the phenomenon that alarge trading country used the government to formulate policies to improve its termsof trade and thereby increase its welfare in the import and export of certaincommodities. The most common is to analyze the economic effects of tariff policies.Lester R. Brown (1955) predicts that China's grain imports will increase significantlyin the future, which will lead to unpredictable increases in grain prices in internationalmarkets. This is the first time that foreign scholars have proposed the concept of "bigpower effect" in the field of grain trade. Long Guoqiang (1999) introduced thetheoretical framework of a large country's open economic model to the analysis ofinternational grain trade, and studied the "big country effect" of China's grain tradefrom the perspective of theoretical explanation.
The initial research on the "big country effect" of China's grain import and exporttrade was to analyze the relationship between China's grain import and export tradeand domestic and foreign grain market prices. Many scholars have carried out relatedresearch to this relationship.Li Zhiqiang (1996) summarized the evolution of the trade policy of the majorgrain varieties since the founding of the People's Republic of China, analyzed China'strade status and international market structure, compared domestic and foreign grainmarket prices, and explored the impact of China's grain imports and exports on worldgrain trade. Koo et al. (1996) based on the construction of a cost minimization modeland different predictions based on different assumptions. They believed that thecontinuous increase in China's grain imports is due to the demand for grain in China,which has driven prices. The rise in production has affected food production in majorfood producing countries.
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2.2 Research on EmpiricalModels of Market Power
Baker and Bresnahan (1998) established the residual demand elasticity (RDE)model to measure the market power of inpidual companies. Taking three Americancompanies as samples, the residual demand elasticity curve of these three companiesis estimated. The establishment of this model provides a method for comparingmarket forces of incomplete substitution products in the domestic market.
After that the surplus demand elasticity model has been widely applied andmodified. Goldberg and Knetter (1999) revised the RDE model to measure the degreeof competition in local export markets. They started from the general situation,assuming that the products were homogeneous, and compared and analyzed themarket power of a group of exporting countries on a specific foreign market. Carter(2001) used the RDE model to measure the international wheat market and concludedthat the US has more market power than Australia and Canada in the wheat importmarket in Japan and has a leading role in market prices. Song (2006) based on theRDE model, created a partial equilibrium model of soybean trade in two countries(China and the United States), including the inverse demand function and inversesupply function, and the remaining demand under equilibrium is equal to Balanceconditions for surplus supply. It was found that under the impact of the competition ofBrazilian agricultural products, China has obvious market power in the internationaltrade of soybeans, while the US market power is smaller. Song (2009) further createdand improved the Seed-Marchant-Reed model on the basis of the partial equilibriumtrade model between the two countries, confirming that compared with the UnitedStates, Brazil andArgentina, China's soybean import trade has more market power.
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3Analysis of the "Great Power Effect" of Grain Import Trade............................12
3.1 Definition of related concepts.............................12
3.2Analysis of the theoretical framework..................... 14
4 Overview of China's grain import trade.............................16
4.1 Overview of China’sAgricultural Policy.....................16
4.2 China's grain production and consumption.....................20
5 Research on the relationship between China's grain imports and domestic andforeign grain market prices..............................27
5.1 Research methods and data description................... 27
5.2Analysis of fluctuations in domestic and international food price..................28
6 Empirical Research on the "Great Power Effect" ofChina's Grain Import Trade
6.1 Research methods and researchhypotheses
At present, the methods for measuring market power mainly includemarket-based pricing model (PTM), price-marginal cost model (PCM), surplusdemand elasticity model (RDE), and surplus supply elasticity model (RSE). Amongthem, the PCM model has strong assumptions and marginal cost data is difficult toobtain; most RDE models are used to measure the market power of exportcommodities, and few scholars have applied them to imported commodities;Seed-Marchant based on RSE models -The Reed (SMR) model is more used tomeasure the market power of imported goods, and the model starts from the importingcountry and the exporting country, and considers the domestic factors of the buyer andseller to compare the market power.
Therefore, by constructing a modified SMR model, this paper conducts anempirical analysis of the existence of the "Great Power Effect" on the basis of acorrelation test. From the pie chart of the structure of China ’s major grain importsources, we can see that among China ’s grain importing countries, the United Statesexports wheat, corn, and soybeans to China in the forefront, and considering theopenness of relevant US data, In the partialequilibrium SMR model of China, China isconsidered as the importing country, its buyer's market power is examined, and theUnited States is regarded as the exporting country, and its seller's market power isexamined. By comparing the market power of buyers and sellers, the market power ofChina's grain import trade is judged and analyzed.
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7 Research Conclusions and Policy Recommendations
7.1 Analysis conclusion
According to the above research content, we can see that the gap of grainproduction and consumption in China is gradually increasing, and domestic graindemand is increasing, which has caused China's grain imports to increase. Theproportion of China's grain imports to domestic consumption and the world's totalimports have both increased, and China has a relatively concentrated source of grainimports, so China faces greater risks in the grain import market. According to theconclusions of this article, it is not difficult to find that, although China's grain importscale is comparable, especially the import volume of soybeans has exceeded 60% ofthe world's total soybean imports, but China still does not have The buyer's marketpower and weak bargaining power can only passively accept the market price set bythe seller. Therefore, this article argues that China's grain import trade does not have a"big country effect."
There are many reasons for this result. This article mainly considers five aspects,including the higher cost of grain production in China, especially the labor cost, whichis much higher than the cost of grain production in the United States. The marketshare of multinational grain merchants is comparable, and the speed and scale ofbusiness expansion in China cannot be underestimated. Grain trade policies at homeand abroad are one of the important reasons affecting China's grain import and export,especially the tariff and quota concessions made after China's entry into the WTO. Itprovides convenience for food imports; China has a relatively simple structure for thecountry of origin of food imports, and a few countries control most of China's foodimports, of which the United States has a similar share, and China's food importmarket is bound to be affected by the United States and other exporting countries;finally The involvement of international speculative funds has caused largefluctuations in the price of the grain futures market and driven fluctuations in the spotprice of grain.
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