China now allows most agricultural prices to be set by market forces,
but the government intervenes in various ways to stabilize markets.
The following table provides a brief overview of the main agricultural
market stabilization policy measures used by the Chinese government.
The measures are used by the national government unless otherwise
specified.
Summary of China's market
stabilization measures |
Measure |
Description |
Reserve management |
Central and local authorities maintain large
reserves of grains, vegetable oils, cotton, and pork to ensure
food security and intervene in markets. Authorities try to
stabilize markets via auctions or additional procurement. |
Value added tax (VAT) refunds or waivers |
At times, refunds of VAT payments are given for
exports of specified commodities. Authorities also can grant
a waiver of VAT on imports of commodities in short supply. |
Transportation tax waivers |
Taxes on rail shipments may be waived
to reduce the cost of grain shipments. Authorities also can
order railways to set aside cars for grain transport. |
Protection prices |
Support prices may be established
for selected grains in important production areas. |
Administrative guidance |
Farmers are generally free to make their own planting
decisions, but local government authorities sometimes issue
directives or plans to increase production of certain crops.
|
Governors' responsibility system |
Provincial governors are charged with
ensuring that grain supply and demand is balanced within their
province. |
