Chapter 5 - Trade in agriculture
This chapter examines recent developments in China's
agricultural sector and Australia–China trade in agricultural products. Of
particular interest is the shifting pattern of food consumption in China,
the Chinese government's commitment to reduce farmers' taxes, and the growing
export opportunities in China
for Australian agricultural producers.
Recent developments in China's
The structure of China's
agricultural industries is changing in response to changing consumer
preferences. Increasingly, Chinese consumers are including vegetables, fruits,
meats and dairy products in their diet. The consumption of traditional staples,
such as grains and rice, is declining.
These changing consumption patterns, and the absolute
increase in demand for agricultural products, reflect China's
rapid economic growth and urbanisation. Urban incomes tend to be higher than
those in rural areas and the proportion of urban to rural dwellers has
increased sharply in recent years. In 2003, rural households' consumption of
grain products was 222 kilograms, compared with 80 kilograms per urban
household. Rural households' consumption of fruit, eggs and milk was
significantly lower than that for urban households, albeit at lower absolute
consumption levels than for the traditional staples.
Between 1975 and 2002, higher disposable income in China
contributed to a fivefold increase in the consumption of vegetables, fish and
meat, measured in calories per person.
The consumption of fruit and eggs increased eightfold. An international
comparison shows that China's
2002 consumption of fish per person was higher than Australia's.
The same year, China's
per person consumption of vegetables was the highest of any nation in East, South
or South East Asia, and more than two-and-a-half times
the intake per Australian.
Traditionally, agricultural self-sufficiency has been a
key policy of the Chinese government. Its market reforms since the late 1970s,
and improvements in technology, have enabled the sector to meet these growing
and changing consumer demands. Indeed, for many products, China's
share of global output in 2002 either exceeded, or was equal to, its share of
global population. Table 5.1 shows that these products include pork (2.2),
vegetables (2.0), eggs (2.0), tobacco (1.7), rice (1.6), rapeseed (1.3), corn
(1.0) and cotton (1.0). The output
to population ratio is low for products including fruit (0.7), beef (0.4),
sugar cane (0.3) and milk (0.1).
Over the past decade, the changes in consumer
preferences in China
have contributed to a shift in Chinese production from land intensive products
such as grains and cereals, towards labour intensive goods including meat,
fruit, vegetables and dairy goods. As a result, the area of land harvested has
A good example is the case of wheat. Over the period
1997–98 to 2003–04, the area harvested in the production of wheat fell from
30.1 to 22 million hectares. Over the same period, China's
production of wheat fell from 123.3 to 86.5 million tonnes, while domestic
wheat consumption fell from 109.1 to 104.5 million tonnes. Since 2000–01, China's
domestic consumption of wheat has exceeded domestic production. In 2000–01, China
imported 0.2 million tonnes of wheat; in 2003–04, it imported seven million
Table 5.1: China's
Share of global output
relative to share in global population (2002)
Vegetables and melons
Beef and veal
Recent developments in China's
rural incomes and trade policy
The single-most important shift in China's
agricultural policy was the introduction of the system of 'household
responsibility' in the late 1970s. The system gave production incentives for
farmers that have increased over time to allow farming production to respond
quickly to changes in urban consumption patterns. However, real farming income has
fallen as production costs increase and agricultural prices fall.
The Chinese government has been increasingly concerned
at the widening disparity between the incomes of rural peasants and a growing urban
middle class. The plight of China's
900 million farmers—and the damage caused by the government's agricultural
policies—was recently depicted in the Chinese bestseller 'A Survey of
The book makes the point that the proliferation of
taxes and local fees has greatly increased the tax burden on farmers. In the
period 1994–97, the average agricultural income grew by 90 per cent; the rural
tax burden increased by 800 per cent.
The most recent estimate is that a farmer pays three times as much in tax as a
city dweller, on a sixth of the income.
In March 2004, Premier Wen
Jiabao announced that agricultural tax would
be eliminated over five years, with permission for provincial authorities to
accelerate the rate of reduction.
The decision is part of the government's broader policy of subsidising rather than
taxing farmers, and ends the centuries' old practice of paying taxes based on
family size and acreage area. Official statistics record that in 2004, these
policies increased the net welfare of Chinese farmers by $US5.4 billion.
In June 2005, Premier Wen announced that farmers would
be exempt from agricultural tax from 2006, three years ahead of schedule. The
central government would increase transfer payments—by $US1.7 billion—to offset
the revenue decreases in local budgets.
Still, the direct subsidies and tax reductions have been estimated to average
only $US5 per rural household member, and the assistance has not provided
farmers with strong incentives to increase plantings.
Moreover, although the decision to scrap agricultural
taxes is significant, the task of alleviating rural poverty requires far bolder
measures. Professor Jiang
Wenran, a political scientist from Alberta
University, has argued that these
decisions usually fall short of expectations. He noted that Premier Wen's
predecessor, Zhu Rongji,
also prioritised reducing the rural tax burden and increasing rural income:
Yet the situation only worsened. China's government must
acknowledge that deep income inequality and rural poverty are no longer
exclusively economic problems, but threaten social peace and political
stability. Comprehensive reform is the only way out.
An important plank of this reform will be to overhaul
the hukou—or household
registration—system. This system was introduced by Chairman Mao
in 1958 as a means for the new Communist government to keep track of its
population. Its effect has been to restrict the movement of people from rural
to urban areas, and to exacerbate the gap between these areas in income and
social benefits. Despite the movement of 100 million farmers to urban areas
over the past 25 years, the hukou
system has offered either limited residency rights or deported these citizens
back to their home provinces.
A recent World Bank report estimated that reform of the
hukou system could increase rural
wages by 17 per cent and allow 28 million people to leave agriculture. Even the official China Daily has
argued that the hukou system has
'hindered national development by barring the free flow of educated
professionals'. There have been
signs over the past five years that the ruling State Council may abolish the
system. However, the concessions granted to date have been minor.
The other aspect of China's
agricultural policy is trade policy. Coinciding with market reforms beginning
in the late 1970s, China
has gradually eased its agricultural tariff barriers and begun reforming its
foreign exchange system. As chapter 4 discusses, the key milestone was China's
accession to the World Trade Organization (WTO) in 2001. In return, China
made a commitment to reduce its maximum tariff level for agricultural products
from 22 per cent to 17 per cent by 2005. Peter
Gallagher of Inquit Communications has observed:
WTO schedule sets a benchmark for developing country agriculture and puts some
earlier new-industrializers such as Japan
to shame for maintaining during the past forty years a panoply of border
barriers on agricultural products ranging up to hundreds of percent on an ad valorem basis.
The Chinese government has also frequently employed
tariff quotas to influence market access for agricultural imports according to levels
of domestic production. For agricultural commodities in which China
is a net exporter, tariff quotas have generally been low. In general, China's
tariff quotas for agricultural commodities have increased in the years since
2001 to allow for further increases in imports. In 2003, the only major
agricultural import that exceeded the set quota was cotton.
Chapter 10 looks more closely at China's
achievements in liberalising agricultural protection under the WTO. Some of the
agricultural issues relating to non-tariff barriers are discussed later in this
Australia–China trade in agricultural products
In 2004, China's
agricultural imports from Australia
totalled $US2.41 billion, consisting mainly of wool, wheat, barley, cotton,
meat and dairy products. The same
agricultural imports from China
totalled $US233 million. The
principal Chinese imports included sugar confectionery, biscuits, pasta, frozen
vegetables, sauces and peanuts. Since 1995, trade in agricultural products
and China has
increased at an annual average rate of 8.8 per cent.
noted that apart from wool and cotton, 'China
is still a small market for Australian agricultural exporters'. He calculated that only six per cent
of total Australian agricultural exports are sourced to China.
Indeed, Table 5.2 shows that only three agricultural commodities—wool, wheat
and barley—are among the top ten Australian exports to China.
The other seven are mineral exports.
However, in terms of the agricultural produce that China
is a dominant supplier. Table 5.3 shows that Australia
largest supplier of barley, beef and wool, and the second largest supplier of
rapeseed and sheep and goat meat.
Table 5.2: China's
top 10 merchandise imports from Australia
Free Trade Agreement Joint Feasibility Study', Department of Foreign Affairs
and Trade, Canberra, and Ministry
of Commerce, Beijing, March 2005,
p. 14. Note: Ranking based on 2004 values.
Table 5.3: Australia's
prominence as an agricultural importer to China
Australian exports to China
Ranking and percentage share among world suppliers
Value (2004 in $US, millions)
Source: Dairy Australia, Australian
Dairy Industry Submission to the Australia–China Free Trade Agreement Joint Feasibility
Study, Department of Foreign Affairs and Trade, Canberra, 2004; China FTA Study
Taskforce and Department of International Trade and Economic Affairs, 'Australia–China
Free Trade Agreement Joint Feasibility Study', Department of Foreign Affairs
and Trade, Canberra, and
Ministry of Commerce, Beijing, 2005.
Note: The percentages for wheat, cotton
and beef are based on the 2004 calendar year. The value for wool is an average
of 2001–03 exports; the value for dairy exports is based on the 2002 calendar
Furthermore, the absolute figures obscure the
significant recent increases in the volume of specific Australian primary
exports to China,
and several other strong prospects for primary commodity exports.
Table 5.4 is reproduced from a July 2005 Australian
Bureau of Agriculture and Resource Economics (ABARE) report. It shows
substantial increases in the dollar volume of Australian cotton, meat, dairy
products and live animal exports to China.
The falling volume of other exports, such as grain, oilseeds and sugar, has
been influenced by climatic factors. The other notable feature is that the
value of Australian food and live animal exports to China
is nearly eight times the value of China's
food and livestock exports to Australia.
Table 5.4: Australian agricultural exports to China
Hides and skins
from China (food and
live animals) ($m)
Source: I. Roberts and N. Andrews,
'Developments in Chinese Agriculture', Australian Bureau of Agricultural and
Resource Economics, July 2005, p. 22.
The Department of Agriculture, Fisheries and Forestry
(DAFF) noted in its submission to the committee that wool has traditionally
been the major Australian agricultural export to China. Some figures support the strength of
Australian wool's export performance and prospects.
China is Australia's largest wool market. In
2002–03, 40 per cent of Australia's wool clip was exported to China. Between 2003 and 2004, the value of
Australian wool exports to China increased by 33 per cent to $A1,243 million.
In 2004, wool was Australia's highest
agricultural export earner in China.
It was second only to iron ore as Australia's main export earner in China
In 2003, the volume of China's wool imports from
Australia was almost two-thirds of China's total wool imports (108 million of
173 million tonnes), and was nearly half China's average wool production for
that year. The most recent
estimate is that Australia supplies 70 per cent of China's wool imports.
The Chinese Customs Bureau records that the
import of Australian wool has fallen from 200,453 tonnes in 2001 to 151,390
tonnes in 2002 to 107,647 tonnes in 2003.
The Woolmark Company has estimated that China's
apparel wool demand at the manufacturing stage will grow from 256 million
kilograms in 2004 to 367 million kilograms in 2010. Australian Wool Innovation Limited
anticipates that 'Australia could be expected to take a substantial share of
this rising demand for wool'.
DAFF's submission identifies strong prospects for Australia's
wool exporters in China
Chinese domestic wool production is predominantly broad micron,
with imports from Australia
traditionally representing finer wool types destined for use in China's
finer textiles and apparel.
Similarly, an October 2005 report prepared for Australian
Wool Innovation Limited (AWI) noted that while China
produced more than 120,000 tonnes of fine wool a year, only 19,000 tonnes of
this would compete with the 153,000 tonnes imported from Australia. AWI's submission to the committee noted
that production of fine and superfine wool (of 19.5 micron and finer) accounted
for 32 per cent of total Australian production in 2003–04. In 1992–93, this
type of wool accounted for only nine per cent of total Australian production. The 2005 AWI report argued that the
overlap between the Australian and Chinese wool industries is 'minimal'.
Burns, DAFF's General Manager of Trade
Policy, told the committee that while there are significant wool-growing
regions in western China,
China's wool is
'of different quality to ours'.
Nonetheless, Mr Burns
acknowledged a perception in China
that their wool producers feel threatened by Australian wool imports. Mr
DAFF's Executive Manager of Market Access, commented: 'Clearly they are trying
to protect their small ethnic minorities in some of the outer regions,
including Inner Mongolia and in the western provinces'.
The committee heard that most Australian wool is
exported to China
in raw form, where it is then processed. The processed Australian wool has
tended to be 'a bit uncompetitive'.
The committee supports current initiatives by the Australian wool industry to
establish research and development alliances with Chinese designers and
retailers, and to promote Australian joint ventures in China.
produces five to six million tonnes
of cotton annually, which is roughly 25 per cent of world production.
Between 2001 and 2003, Australian production averaged 0.5 million tonnes, or
2.3 per cent of world production.
Whereas most of China's
cotton production is consumed domestically, 90 per cent of Australian cotton
production is exported. Australia
is the fourth largest supplier of cotton to China,
although Chinese demand for cotton imports can vary markedly from year to year.
imports of 208,000 tonnes in 2002 increased to 1,984,000 tonnes in 2004. Between 2003 and 2004, the value of
Australian cotton exports to China
increased by $A142 million, or 210 per cent.
One of the key factors promoting Australian cotton
exports to China
will be further appreciations of the Chinese yuan. In July 2005, Queensland Cotton
Holdings Chief Executive, Mr Richard
Haire, highlighted the importance of
international trade issues such as the value of the Chinese currency to the
domestic industry. Moreover, the committee
notes the opportunities for Australian cotton exporters given the size of China's
textile industry and the fact that it has not moved to become self-sufficient
Barley and wheat
Between 2001 and 2003, Australia's
barley production was more than double China's.
Over this period, China's
production of barley (3 million tonnes) was outstripped by its consumption (4.9
million tonnes). Barley imports
accounted for an average 1.1 million tonnes of this 1.9 million tonne
wheat production averaged 90 million tonnes between 2001 and 2003, compared with
million tonnes. Of this amount, Australia
exported an average of 14 million tonnes of wheat annually, of which 43,964
tonnes (0.3 per cent) was exported to China.
Australia is China's
third largest importer of wheat behind the United
States and Canada.
The State of Western Australia
is the principal exporter of both wheat and barley to China.
In 2003–04, Western Australia
contributed 99 per cent of Australia's
wheat exports ($A165 million) and all of Australia's
barley exports ($A25 million) to China. Remarkably, in 2000–01, the state's
share of wheat exports to China
was only 33 per cent or a little over $A5 million. The committee heard that climatic
factors in Australia
were the principal cause for the sharp increase in exports.
In October 2003, coinciding with the announcement of
the Trade and Economic Framework (see Chapter 11), China
signed a protocol on wheat and barley exports. Under the terms of the protocol,
quarantine authority agreed to remove ring spot as a pest for Australian wheat
and barley exports to China
for processing. The importance of
quarantine and non-tariff or 'beyond the border' issues for Australian
agricultural exporters to China
are discussed later in this chapter.
As mentioned earlier, the rising affluence and
urbanisation of China's
middle class is leading to greater consumption of dairy goods. Table 5.1 shows
self-sufficiency in milk, soy beans and sugar cane is low. Dairy Australia
stated in its submission to DFAT's FTA Joint Feasibility Study that the Chinese
market for imported dairy products will continue to grow between 5 to 15 per
cent per year for the next 10 years.
In 2002, Australia
supplied roughly one quarter of China's
imports of dairy products. Table 5.4 shows that Australia's
exports of dairy goods and sugar cane to China
account for a relatively small proportion of total Australian agricultural
exports to China.
Still, in the decade between 1993 and 2002, the value of Australian dairy
exports to China rose from $A2 million to $A118 million. Most of this increase
can be attributed to the surge in exports of skim and whole milk powder and
whey and whey powder to China.
Equally, the fall in the export value of dairy products
to $A70 million in 2003 reflects the declining export volumes of these key
products. The reason for the fall
is a combination of the drought in Australia,
low world commodity prices for dairy products and the high value of the
anticipates that China's
consumption of cheese will increase from its current low base as incomes
increase and the diet westernises. It noted that 'most older Chinese still find
the taste and smell of cheese offensive', but that consumption will probably
increase as it has done in other North Asian countries. The committee believes that
Australian dairy exporters must continue to conduct careful market research on China.
It may be that in some cases, Australian produce must be adapted to fit Chinese
Table 5.1 shows that pork is the agricultural product
in which China
has greatest self-sufficiency. The proportion of China's
pork production relative to global output is more than double the proportion of
population to world population. Not surprisingly, therefore, China
is the world's largest pig producer.
Between 2001 and 2003, China's
average annual pork production was almost 43.4 million tonnes compared with Australia's
production of 0.4 million tonnes.
The two-way trade in pork is insignificant. China
has not exported pork to Australia
and has a number of well-publicised endemic diseases. Australian pork exports
to China are
restricted by both the high volume and low cost of China's
domestic production. Nonetheless, Australian Pork Limited is optimistic that
the Australian pork industry can capture a greater share of the Chinese market
provided the current average tariff rates of 20 per cent are eliminated. In
particular, it anticipates that 'as the Chinese market develops and consumer
incomes rise, there are likely to be significant opportunities for high quality
products from 'clean green' countries such as Australia'.
In its June 2004 submission to DFAT's FTA Feasibility
Study, the Australian Food and Grocery Council noted the success of some
Australian food producers in exporting to the 'more affluent quality focused
Chinese consumers'. Indeed, highly
processed Australian food exports to China
have increased from $21 million in 1996–97 to over $100 million in 2002–03.
Total Australian processed food exports to China
were valued at $600 million in 1996–97, rising to around $900 million in 2001–02,
before the drought reduced this value to $658 million in 2002–03. China's
spending on processed and unprocessed food increased from roughly 2100 billion
yuan in 1997 to roughly 3200 billion yuan in 2004. The committee notes the
opportunities that China
processed food exporters.
The committee recommends that Australia's
agricultural exporters—in cooperation with key government agencies such as DAFF
and Austrade—put particular care into researching the China
market. There will be significant export opportunities for Australian primary
producers as China's
incomes rise and the restrictions on trade are removed. For these opportunities
to be recognised, it is imperative that Australian exporters have up to date
information about consumer tastes and producer requirements as they vary from
region to region.
The role of
Australian government agencies in agricultural trade with China
DAFF's role is to improve market access for Australian
exporters in China.
The committee heard that DAFF 'pursues requests prioritised by portfolio industries
to improve or maintain market access for their products into China
and negotiates with Chinese authorities on bilateral quarantine issues'. It performs this function through a
variety of forums.
First, DAFF raises portfolio issues through the Joint Ministerial
Economic Commission. This is the main bilateral ministerial forum, held every
two years. In the intervening years, DAFF officials also meet with their
Chinese counterparts. In addition, a Joint Agricultural Commission meeting is
held every three years.
Second, DAFF has devoted its own resources to the China
relationship. In 2003, for example, the department appointed an agriculture
counsellor to the Australian Embassy in Beijing. It has also appointed an SES Band 2
officer to represent Australian agricultural interests in the negotiation of an
Third, DAFF plays an important role in several ongoing
forums with Chinese officials on agricultural issues. In April 2004, for
example, the department oversaw meetings:
in Beijing for the Joint Working Group on Wool;
in Guangzhou for discussions on market access
for Australian horticultural imports; and
in Beijing for discussions on animal and plant
health, following the October 2003 Memorandum of Understanding on Sanitary and
Fourth, DAFF has responsibility for promoting
Australian joint ventures in China
through the Australia–China Agricultural Cooperation Agreement (ACACA). Since
the ACACA was signed in 1984, there have been more than 170 Australian projects
approved across a wide range of agricultural and natural resource industries.
Fifth, DAFF has signed several Memoranda of
Understanding (MOU) with various Chinese ministries to improve collaboration on
agricultural issues. In October
2003, for example, DAFF signed an MOU on water resource management with China's
Ministry for Water Resources.
DAFF's lead role in the bilateral dialogue on
agricultural issues is supplemented by agencies such as the Australian Centre
for International Agricultural Research (ACIAR). According to ACIAR, its strategy
on China focuses
of agricultural production through policy and technical projects on better
management of water, land and forest resources in less-developed regions in
northwestern and southwestern China. In addressing sustainable production, the
need to raise farmers' incomes through increased productivity and quality of
crops, livestock and forestry products is also addressed in project design.
The impact of free trade on Australian agriculture
has a comparative advantage in land based agriculture—grains and broadacre
crops—and in high quality dairy products. Chapter 11 finds that a comprehensive
FTA would enhance significantly Australia's
market access for these exports. The 2005 AWI report (paragraph 5.26) estimates
that free trade with China
could increase the value of Australia's
wool exports by $794 million. Free
trade would also enable Australian exporters to capitalise on China's
growing demand for wool and dairy products.
Quarantine and 'beyond the border' issues for Australian exporters
Another key issue for Australian agricultural exporters
in accessing the Chinese market is quarantine. China,
as a member of the WTO, has obligations to apply a science-based approach to
import risk-analyses. The WTO's sanitary and phytosanitary (SPS) measures serve
to guide, rather than restrict, national quarantine rules. The SPS measures are
respected internationally as a science-based framework for the protection of
consumer safety and the promotion of trade. The general grievance with China's
quarantine standards is that they are often inconsistent with WTO standards and
are not obviously science-based.
The export of Australian wool to China
is a good example. A submission from R. J. Quirk Consulting to the Joint FTA
Feasibility Study in June 2004 noted that China
refuses to recognise the internationally accredited status of WTO test
certificates. All Australian wool exports are subject instead to the Chinese
system of mandatory inspection and retesting. Mr
Quirk argued that China's
State General Administration for Quality Supervision and Inspection and
Quarantine (AQSIQ) officials:
...claim that their local testing procedures are as good, if not
better, than those of IWTO [International Wool Textile Organisation] but
continually ignore the fact that it is physically impossible for their
technicians to obtain representative samples for testing from dumped wool
bales. IWTO procedures make provision for any suspect test results to be
queried but AQSIQ refuses to recognise IWTO certificates and China's
membership of IWTO.
In other industries, China's
quarantine system significantly inhibits trade. Mr David Minnis,
deputy chairman of the Australian Horticultural Exporters Association, claimed
that Australian citrus producers remain excluded from the Chinese market after
seven years of negotiations. A
major reason is China's
protocol that Australian citrus must be held at temperatures close to zero
during shipment. The export of Australian apples to China
has been particularly problematic. Tasmanian apple growers do not have access
to the China
market because of quarantine measures requiring exporters to show that certain
insect pests do not exist. Yet,
the types of pests that are screened do not exist in Tasmania.
told the committee that the department has been working 'for some time now' to
get the Chinese to advance their import risk assessment system for citrus
products so that trade can occur.
The Murray Valley Citrus Marketing Board highlights the opportunities in China
for high-quality Australian citrus products, but adds that 'a more efficient
and effective quarantine access approval process would be a very desirable
outcome in any FTA negotiations'.
discussions on quarantine issues are generally left to specialised bilateral negotiations,
such as those resulting in the Australia–China MOU on Sanitary and
Phytosanitary Cooperation in October 2003. There have also been opportunities
for Australian officials to have side discussions with their Chinese
counterparts at the SPS committee in Geneva. DAFF did acknowledge to the committee that:
...in order that some of
the gains we might get out of the FTA do result in real trade, we as a
department need to move in parallel with the FTA in negotiations, trying to
advance as best we can the scientific issues to do with quarantine
market access, as we have over the last few years. Certainly we will be
endeavouring to do that over the next little while.
We do have very good
relationships with the quarantine authorities in China. We have been working for a long time on technical cooperation with the
Chinese, and that work has included having some of their officials sit within
our department for about three months at the end of last year so that they
could become accustomed to how we operate. We put our counsellor there in 2003,
and that has also helped to develop relationships with the quarantine
authorities there. I think in the long run those relationships we are building
will have a beneficial effect in terms of getting access.
A closely related concern for Australia's
agricultural exporters is the variation in quarantine costs from province to
province. Mr Steven
Macmillan, a consultant from China Business
Focus, told the committee that:
there is a testing procedure for wool that is
imported into China
and it has a small fee attached to it. That fee is set at the provincial
government level and it differs from provincial government to provincial
government. That is an example of something that should ideally be under the
purview of the national government, being a foreign trade issue. But it is not,
and it is unpredictable as a result of that.
This imposition of a local fee provides another example
of the problems Australian businesses confront at the provincial level. Chapter
4 has acknowledged that local government interference is a major impediment for
Australian businesses operating in China
and recommended a system for reporting these impediments to Austrade (recommendation
Australian agriculture stands to benefit significantly
rapid industrialisation and diversification of consumer tastes. It is well placed
to capitalise on strong Chinese demand for milk and butter, and to build on its
well-established foothold in China
for its wool and grain exports. As a key agricultural supplier to the Chinese
will benefit from freer agricultural trade with China
(see chapter 11).
The committee acknowledges the legitimate concerns of
the Australian horticultural industry competing with low-cost Chinese
producers. It supports the Australian government's October 2005 decision to
strengthen food labelling laws by requiring both packaged and many unpackaged
products to display a specific country-of-origin label (see chapter 12). The committee also supports stronger
efforts to ensure China's
quarantine rules are based solely on scientific assessment of import risk. Australia's
policy of a more liberal agricultural trading relationship with China
must not be damaged by quarantine, anti-dumping or tariff measures used to
protect its own local industries. Accordingly, state assistance for Australia's
horticultural industry must focus on reducing local production costs, capitalising
on seasonal export opportunities and selling the merits of the high-quality
agricultural sector will be the focus of continuing rapid social and economic
change. Roughly 60 per cent of China's
population is employed or directly reliant on agriculture. Their wages are, on
average, 40 per cent less than their urban counterparts. Many have left agriculture in the
hope of factory employment in urban areas: the hukou system restricts many more from leaving. Whether the
government's policy to abolish rural taxes has slowed the movement from rural
to urban areas is unclear. In any event, China
will retain a strong comparative advantage in labour-intensive agriculture for
some time yet. The government's ambition to treble the size of the national
economy between 2000 and 2020 will depend principally on urban expansion. The
welfare of the majority of China's
people will depend on rising rural incomes.
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