How much does regional bias affect China's regional agricultural trade?

Abstract

PurposeMarket integration in China is still progressing, while the border effects of trade among regions still exist. The question of whether eliminating or weakening regional bias can promote of China's agricultural trade still remains an important issue. This paper analyzes the impact of regional bias on China's agricultural trade.Design/methodology/approachThis paper constructs a pure exchange computable general equilibrium model of nine regions and three sectors, and analyzes the impact of regional bias on China's regional agricultural trade; Comparing the differences of regional bias on China's inter-regional and external agricultural trade, the paper especially analyzes the impact of the agricultural imports and exports in eight regions of China.FindingsThe results show that regional bias has had substantial impacts on China's agricultural trade. Elimination of regional bias would therefore increase China's agricultural exports and imports by factors of 1.32 and 1.63, respectively while its agricultural trade deficit would increase by 84%. Inter-regional agricultural trade in China would increase by 3.53 times. With the elimination of regional bias, the Northern coastal, Central and Northwestern regions would have the largest increase in inter-regional agricultural trade. Unlike the Northern coastal region, inter-regional agricultural import in the Central and Northwestern regions tends to be greater than inter-regional agricultural exports.Originality/valueThis paper thus aims to fill existing gap in investigating the impacts of regional bias on China's agricultural trade. Firstly, the model proposed in this paper does not only consider the linkage between the agricultural and non-agricultural sectors, but also the inter-regional agricultural trade linkages of the different regions in China. Secondly, the authors decompose home bias into national and regional biases and assess how regional bias affects agricultural trade of the various regions of China.