Working Paper: CEPR ID: DP3171
Authors: Kym Anderson; Shunli Yao
Abstract: China has always strived for self-sufficiency in farm products, particularly staple foods. Its rapid industrialization following its opening up to global markets during the past two decades has been making that more difficult, and its accession to the WTO may add to that difficulty. New agricultural biotechnologies could ease that situation. The adoption and spread of some of those biotechnologies in agriculture have, however, raised concerns, particularly over the environmental and food safety effects of genetically modified organisms (GMOs). This Paper focuses on possible implications of the GMO controversy for China, since it is prospectively not only a major producer and consumer of GM farm products but also a potential exporter of some of them. It explores the potential economic effects of China not adopting versus adopting GMOs when some of its trading partners adopt that technology. The effects are shown to depend to a considerable extent on the trade policy stance taken in high-income countries opposed to GMOs and/or to liberalization of China?s trade in textiles and apparel.
Keywords: China; GMOs; Import Ban; Trade Policy; WTO
JEL Codes: C68; D58; F13; O30; Q17; Q18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| China adopts GMOs (Q16) | Economic gains for China (F69) |
| China does not adopt GMOs while others do (Q16) | Reduced market competitiveness for China (F69) |
| Reduced market competitiveness for China (F69) | Lower exports and higher import costs for agricultural products (Q17) |
| Adoption of GMOs (Q16) | Reduced production costs (D24) |
| Reduced production costs (D24) | Increased supply (J20) |
| Increased supply (J20) | Affects international trade flows and prices (F69) |
| China adopts GMOs (Q16) | More favorable terms of trade (F14) |