Market liberalization and crop planting decision: a case of China

Abstract

PurposeThe paper aims to measure the effects of market liberalization on Chinese farmers' crop planting decisions.Design/methodology/approachThe effects are measured using a censored, two‐stage, least‐square regression.FindingsThe results show that the effects of market liberalization on planting decisions are more significant in the case of crops with minimum support price (rice, wheat, and corn) than in the case of crops where planting decision is determined by market prices (cotton and soybean). The effects appear to be different across regions and time zones and more significant in 1993 than in 2005.Originality/valueThe result suggests that market liberalization along the past ten years achieved significant effects in Chinese farmers planting decision. This outcome should be taken into consideration when evaluating and implementing future Chinese agricultural policy income‐based interventions as a means to meet domestic food security goals and increase farmers' income level.