Enter the Dragon How China's accession to the WTO will affect Thailand's agricultural and food industries China - The Big Picture   Published on January 2, 2002

Key Developments and A Few Important Numbers

When China first began opening up to the outside world in 1949, its population stood at 541.67 million. By 1969, its population had grown to 806.7 million as a result of ineffective birth control measures and an improvement in health and living conditions. By the early 70s, the government realized that the rapid growth in population would have major impacts on social and economic development, medical care, employment and the environment. In response to this, the government implemented a family planning policy in an attempt to curtail population growth. Since implementing the policy, the country's birthrate has continuously decreased.

China in a Snapshot

.	2000
Population (millions)	1,262.5
.	.
By age	% of total population
People aged 0-14	22.89%
People aged 15-64	70.15%
People aged 65 +	6.96%
.	.
By gender	% of total population
Male	51.63%
Female	48.37%
.	.
By urbanization	% of total population
Urban population	36.0%
Rural population	64.0%
.	.
Productivity indicators	.
GNI per capita (US$)	840.00
GDP (US$ billions)	1,076.9
.	.
Sector contribution	% of GDP
Agriculture	15.9
Industry	50.9
Services	33.2
.	.
Key GDP components	% of GDP
Private consumption	47.0
Imports	23.1

Source: www.china.org.cn

The rate of illiteracy prior to 1949 stood at almost 500 million, or 80 per cent. At this point, the government made education a leading priority and began reforming all education policies. By last year, this rate had dropped to just 16 per cent. Statistics in the Communique on Major Statistics of the Fifth Nation Population Census in 2000 (no. 1) reveal that 3.6 per cent of the population has had a university education (defined as two years of college and above), while 11.1 per cent of the population had received senior secondary school education (including secondary vocation school education). The census showed that 34 per cent of the population had received a junior secondary education, while 36 per cent had received a primary level education (included graduates and those enrolled at the time the census was carried out).

Rural workers' net income grew 83 per cent between 1949 and 1978, representing an average annual growth rate of 2.9 per cent. While rural income has continued to grow since 1978, income from agriculture has steadily fallen since 1980.

Private consumption by Chinese citizens countrywide has gradually declined since the 1980s. This could be due to monetary policy incentives to increase savings because if we look at gross national income (GNI), we can see that it has grown at an average annual rate of 6.6 per cent. Consumption of consumer goods is increasing in urban areas. The study shows that annual per capita expenditure in urban households grew from 4,615.91 yuan (US$ 557) in 1999 to 6,147.38 yuan ($ 742) in 2000.

Consumption patterns in China show that there is an increasing demand for high quality goods. Economic models show that when incomes rise, there is usually an increase in consumption of high protein foods. Indeed, this has already been the case in China, where consumption of poultry, milk, eggs, fruit and vegetables has gradually increased over the years, while sales of rice and grains have shown no signs of growth.

The people of China once labored after the four 'essential' consumer durables - bicycles, wristwatches, sewing machines and radios. Today, the most sought after consumer durables are TVs, washing machines, tape recorders, refrigerators, electric fans and cameras. In terms of the agriculture sector, the addition of the refrigerator is significant because it highlights the fact that Chinese citizens are making the transition from raw vegetables and meats to processed, storable and value added foods.

The Fat of the Land

Prior to 1949 China was a huge agrarian nation of farm households living in villages ruled by landed gentry supported by Confucian-trained bureaucrats. However, China's agricultural economy was transformed following the communist revolution of 1949. In the early 1950s, the government of Mao Zedong reformed land policies by expropriating and dividing the aristocrats' landholdings, distributing parcels of land to farmers and peasantry. By the late 1950s, these smallholdings were collectivized into large areas managed by communes. Workers incomes became directly correlated to their physical ability. In 1970, the agriculture reforms instituted in 1970 brought an end to the communes and restored household farms and rural markets. As a result of this, households were given the right to utilize specific plots of land.

China's agricultural economy is now transitioning from a communist planned economy, based upon archaic Soviet labor and land intensive methods, to a market-based economy. The country is aiming to develop its agriculture sector into one that is modern and specialized. China's main agricultural areas are in the South, on the northern China Plains and in northeastern China.

     Southern China has a long growing season and an abundance of water. This area is often referred to as the "land of fish and rice" because the soil is very productive for growing rice and the many rivers produce an abundance of freshwater fish. It is also famous for producing tea and silkworms.

     The northern China Plains area is famous for its fertile brown topsoil. This area produces much of China's wheat, corn, millet, sorghum and cotton. The Huai, Huang (Yellow) and Hai rivers supply irrigation for this region.

     Northeastern China has fertile black soil, which is good for growing wheat, corn, soybeans, sorghum, flax and sugar beets.

     Fruit and vegetable plantations are found throughout China. The wide variety of growing areas means that a host of different fruits and vegetables can be grown within the country.

The Wheels of Industry

China's industrial foundations have been strengthening since 1949. Production levels have consistently increased over the years. During 1980-1999, income from industry as a percentage of GDP rose at an average rate of 11.1 per cent per annum.

Industrial reform in China has gone through several phases:

     The first phase gave more power to entrepreneurs.

     The second phase meant that a higher degree of profits could remain within enterprises.

     The final phase included the introduction of foreign capital, opening the country's markets to the outside world, and the creation of policies that would encourage trade liberalization.

Major Trading Partners

Japan is China's biggest trading partner. Sino-Japanese trade reached $ 83.17 billion in 2000. The U.S. is China's second largest trading partner, while trade between China and the E.U. accounted for $ 69.04 billion in 2000. As economic development within the Association of Southeast Asian Nations (Asean), the Republic of Korea and Russia increases, trade with China will likely grow. Last year, trade between Asean, Russia, the Republic of Korea and China reached $ 17.34 billion.