Part of the research I have undertaken in effort to write my term paper has highlighted the trade deficit between United States and China. People argue that trade subsidies in the auto industry coupled with alleged price fixing in China grants the nation an artificial comparative advantage. A Reuters article notes that China is poised to buy 600,000 T of corn. While this is clearly not substantial enough to close the trade deficit, it will lessen the gap a little bit. The important take away is that it shows that Chinese farmers want agricultural import curbs eased – signaling that, at least in the agricultural industry, natives are pushing to trade on a level where only natural comparative advantages exist.
It seems that rather than agri farmers wanting import tariffs reduced, it is the relatively smaller amount of farmers that primarily engage in animal rearing that would like to import additional corn. While comparative advantage holds in this case, the effect seems to have been amplified by mediocre harvest performance in the past year.
As Wen points out, grain farmers in China surely want higher prices, not imports. So who is importing? Animal feed isn’t the only market, but likely the main one. And this was a bad year in the US, so corn prices are high (and therefore beef). Now corn is water intensive (though not like rice, which needs standing water); wheat is less thirsty. This thus also ties in with environmental issues. Over the longer run China will surely be a consistent and large grain importer, as per comparative advantage, but not for all grains. Now however it’s not a national security issue, or a life-and-death issue. You want more beer and more beef (in China, pork)? – grain demand rises. Grain imports are now a sign of prosperity.