Working Paper: CEPR ID: DP18540
Authors: Casper Worm Hansen; Asger Wingender
Abstract: China liberalized imports of agricultural goods upon WTO accession in 2001. The ensuing surge in imports became one of the largest shocks to global agriculture in the past three decades. We use variation in Chinese demand for different agricultural products to track the effects of the shock from the global level, to the country-level, and down to the local level in Brazil and the United States, China's main suppliers. We find that cropland expanded to meet Chinese demand to a degree that consumers elsewhere did not see higher prices. Cropland often expanded through conversion of pasture, but our results nevertheless indicate that Chinese demand for agricultural products has been the main driver of global deforestation over the past decades. Taking advantage of detailed U.S. data, we find that Chinese demand made farms more profitable, but we find no clear effects on agricultural wages.
Keywords: China; Agriculture; International Trade; Development; Land Use
JEL Codes: F63; O13; Q17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Chinese demand for agricultural products (Q11) | global deforestation (Q23) |
| Chinese demand for agricultural products (Q11) | cropland expansion (Q15) |
| cropland expansion (Q15) | agricultural prices (Q11) |
| Chinese demand for agricultural products (Q11) | profitability of farms (Q12) |
| Chinese demand for agricultural products (Q11) | agricultural wages (Q11) |
| Chinese demand for agricultural products (Q11) | agricultural employment in US counties (J43) |
| Chinese demand for agricultural products (Q11) | labor reallocation from cattle production to crop production in Brazil (F16) |
| Chinese demand for agricultural products (Q11) | extensification of agriculture (Q15) |
| Chinese demand for agricultural products (Q11) | changes in land use patterns in Brazil and US (R14) |