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Rice Exports: A New Dimension in China's Economic Relations with Southeast Asia

Published online by Cambridge University Press:  07 April 2011

Extract

China has long been the world's largest producer of rice, with an annual output regularly accounting for a third of the world's total rice production. In recent years, China has also risen to become the world's largest rice exporter, with a volume coming close to a third of the world's total exported rice. The bulk of the Chinese rice exports are destined for the rice-consuming Southeast Asia, including Vietnam. Among the five Southeast Asian countries, namely, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, which today constitute the Association of Southeast Asian Nations (ASEAN), only Thailand produces a food surplus while the others have to import rice in amounts which, with the exception of the city-state Singapore, vary each year according to their domestic rice harvests.

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Articles
Copyright
Copyright © The National University of Singapore 1979

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References

1 A fairly large amount of literature on the general aspects of China's foreign trade is available in English. Of greater relevance to this paper, is Mah, Feng-Hwa, The Foreign Trade of Mainland China (Chicago, 1972).Google Scholar

2 F.A.O., , The World Rice Economy, vol. 1, Commodity Bulletin Series No. 36 (Rome, 1962)Google Scholar.

3 See, e.g., Far Eastern Economic Review, 21 May 1964; Feng-Hwa, Mah, “Why China Imports Wheat”, China Quarterly, no. 45 (January-March 1971) 116–28Google Scholar; Donnithorne, Audrey, China's Grain: Output, Procurement, Transfer and Trade (Economic Research Centre, The Chinese University of Hong Kong, 1970)Google Scholar; and Perkins, Dwight H., “Constraints Influencing China's Agricultural Performance”, in Joint Economic Committee, Congress of the United States, China: A Reassessment of the Economy, (Washington, D.C., 1975)Google Scholar. Most the early controversies centred on whether China imported wheat to make up for overall domestic shortage and to avert starvation, etc. (the “production argument”) or to relieve the government pressure on procurement or to build up stocks (the “distribution argument”). In a separate, more technical paper, currently under preparation, the present author applies some routine econometric techniques and finds that there is more validity in the “distribution argument”, which is also the informal official explanation (i.e., China imports wheat in order to ease regional distribution). The regression results indicate that Chinese rice exports are significantly responsive to price changes and total grain output, while there is no statistical relationship between wheat imports and domestic grain output.

4 See Wong, John, “The Role of China in Singapore and Southeast Asian Trade”, Southeast Asian Journal of Social Science 3, no. 1 (1975): 4359.CrossRefGoogle Scholar

5 For a detailed discussion of Sino-Indonesian trade, see Wong, John, “The Economics and Politics of Sino-Indonesian Relations”, Asian Profile 5, no. 4 (1977): 385402Google Scholar; and for Sino-Thai trade, see Wong, John, “Thai-Chinese Trade: Problems and Prospects”, Bangkok Bank Review 14, no. 9 (1973): 570–86.Google Scholar

6 For a detailed analysis of Sino-Malaysian economic relations before detente, see Wong, John, The Political Economy of Malaysia's Trade Relations with China (Singapore, 1974)CrossRefGoogle Scholar.

7 For a detailed economic analysis of Chinese rubber imports, see Wong, John, “Chinese Demand for Southeast Asian Rubber 1949–72”, China Quarterly, no. 63 (1975): 490514.CrossRefGoogle Scholar

8 For a more detailed discussion of the rice trade and rice markets in Southeast Asia, see International Development Center of Japan, Policies on Rice in Southeast Asia for Short-run Fluctuations and Long-run Production (Tokyo, 1974)Google Scholar; and Wibulswadi, Chaiyawat, “Thai Rice Exports: An Analysis of Its Performance in the 1960s”, in Ungphakom, Puey et al. , eds. Finance, Trade and Economic Development in Thailand. Essays in honour of Khunying Suparb Yossundara (Bangkok, 1975), pp. 167–90.Google Scholar

9 For a concise discussion of the main agricultural development problems in Southeast Asia, see Wong, John, ASEAN Economies In Perspective: A Comparative Study of Indonesia, Malaysia, the Philippines, Singapore and Thailand (London, 1978)Google Scholar.

10 For a good perspective on the rice policy in Indonesia, see C. Peter Timmer, “The Political Economy of Rice in Asia: Indonesia”, Food Research Institute Studies (Stanford), no. 3 (1975).

11 See Government of Malaysia, Third Malaysia Plan, 1976–1980, (Kuala Lumpur, 1976)Google Scholar. See also Goldman, Richard H., “Staple Food Self-Sufficiency and the Distributive Impact of Malaysian Rice Policy”, Food Research Institute Studies (Stanford), vol. 14, no. 3 (1975).Google Scholar

12 See Siok-Hwa, Cheng, The Rice Trade Of Malaya (Singapore, 1973), p. 6 and App. 3.Google Scholar

13 See Mangahas, Mahar, “The Political Economy of Rice in the New Society”, (IEDR Discussion Paper No. 74–10, July 1974, School of Economics, University of the Philippines)Google Scholar.

14 See “Philippines Counts Its Blessings”, Far Eastern Economic Review 18 Dec. 1977.

15 Such observation was made in early 1960s. (F.A.O., Rice Reports, 1963, Rome, p. 3.) During the rice crisis in 1973/74, when the price of Thai rice shot up by four times, the Government of Singapore had great difficulty in persuading the consumers to shift from the expensive Thai rice to the much cheaper Pakistani rice.

16 China did the same for Thai sugar. See Far Eastern Economic Review, 22 Sept. 1978.

17 Apart from the regular projections prepared by the F.A.O., the other organizations such as the World Bank, the Asian Development Bank, and the International Food Policy Research Institute also undertook some medium-term projections.

18 Back in 1971, the late Premier Chou En-Iai told a Japanese delegate that China had already solved the food problem in terms of quantity and the main issue was to improve its quality. Thus the National Agricultural Conference in October 1975, which called for acceleration of mechanization of China's agriculture during the Fifth Five Year Plan (1976–80), indicated the official concern over rising demand pressure for food due to rising incomes. See Shigeru Ishikawa, “China's Food and Agriculture: A Turning Point”, Food Policy, May 1977.

19 For a more detailed analysis of the various implications of China's future food prospects, see Shigeru Ishikawa, op. cit.

20 According to the observation of Mr. Oshio Komoto, Japan's Minister of International Trade and Industry (MITI), after his recent tour of China, the outlook of China's current ten-year development programme, 1976–85 was good. The engine for economic growth had been “activated” by political stability, and he expected that the plan would “succeed and even surpass some of its goals”. Asian Wall Street Journal, 28 Sept. 1978.

21 The process of marginal substitution of wheat for rice is already evident in Taiwan and Hong Kong, and that involving the shift from coarse grains to rice is also going on in parts of Southeast Asia. See the excellent study by the F.A.O., The Economic Relationship Between Grains and Rice, Commodity Bulletin Series No. 39 (1965). China, being a centralized administrative state, can probably achieve the desired substitution with less difficulty. Also, the special pattern of grain distribution in China could help in reducing the rate of substitution in the shift from coarse grains to rice, because most rice-producing regions do not produce as much coarse grains while the coarse grains are mainly produced in the wheat regions. For instance, in Central-South China, the composition of food grains is 69% rice, 8% wheat, and 13% coarse grains while in North China, 1% rice, 23% wheat, and 66% coarse grains. See, Shigeru Ishikawa, op cit.

22 See International Development Center of Japan, op cit.

23 Even the United States, which is currently the world's foremost food supplier to socialist countries, does not derive much political influence from food exports. See Congressional Budget Office, U.S. Congress U.S. Food and Agricultural Policy in the World Economy (Washington, D.C. 1976).