China’s Self-Sufficiency
First, it is important to discuss the reasons behind China’s push to become self-sufficient in crops such as corn, wheat, and soybeans. The production of food and its overall liberalization of trade are globally acknowledged phenomena. As imports rose with better productivity and comparative advantage, there was anxiety over national food sovereignty. Furthermore, the Chinese population felt a sudden urge to protect rural livelihoods, thereby making the state largely reliant on them (Zhan, 2022). In combination with the U.S. economy, China shifted its focus to self-reliance in grain production over recent years.
Given the impact on U.S. and Chinese farmers, it will have a definite positive effect on the latter. Here, Chinese farmers will experience price fluctuations and increased demand for grains. It is important to note that, given the difficulty of calculating, there is insufficient data on corn imports and exports from China (Lohmar, 2023). As there will be fewer import alternatives, demand for grains will become inelastic, meaning it will remain stable even with higher prices. This will directly affect the producers’ revenues.
There are diverse opinions on a given situation as well. Another perspective on impact is discussed by Fosu (2020), who stated that, since the major increase in livestock in the main corn importers from the U.S., demand for the product will increase sharply over the years. This contradicts other predictions that U.S. farmers might lose over $ 5 billion due to reduced demand in China (WSJ Explained, 2023). Furthermore, Fosu’s study suggested that the U.S. should focus on its import partners, such as Korea and Japan, to increase demand for corn imports. However, U.S. farmers will face definite short-term fluctuations in supply and demand.
Smith and Ricardo’s Perspectives
Economists such as Adam Smith and David Ricardo may, in theory, interpret China’s efforts to achieve self-sufficiency through the prism of comparative advantage. Although they may highlight the efficiency advantages of trade and specialization, they also consider China’s strategic leveraging of its abundant resources to achieve greater economic independence. Here, the application of the free market would not be sufficient to examine, since the conflict between China and the US also has a cultural and political form (Tao, 2022). From their point of view, the choice to outlaw genetically modified corn in Mexico may be evaluated in light of potential health or environmental implications, as well as the principles of free markets.
It is possible to argue that, from a Ricardian perspective, countries should trade goods in which they have a comparative advantage. At this point, the U.S. has a comparative advantage in corn, as the video suggests, due to higher productivity and higher yields per acre (WSJ Explained, 2023). However, the simplified Ricardian model cannot explain the current situation, as Brazil has a similar comparative advantage in corn production.
The terms of trade and comparative advantage might work, but are too simplified for this case (Hill, 2021). Furthermore, the question asks how David Ricardo would view Chinese self-sufficiency. However, the point is that China is not trying to be fully self-sufficient; it is just changing its trading partner. Thus, it does not contradict the Ricardian model and Ricardo’s theory of labor value.
Geopolitical Implication
There are both domestic and international political reasons behind self-reliance. First of all, China is evidently trying to distance itself from the U.S.-dominated global market and create its own trade rules. Here, China tries to be the main actor and influence global regulations and rules. Li and Li (2021) argue that economic policy uncertainties and the lack of uniformity in policy greatly influence China’s grain import decisions.
Furthermore, it can be used as a political tool to pressure the U.S. to favor China in grain imports. This is because China is trying to reduce its imports from the U.S. across all sectors, including corn. Lastly, it can be argued that current Chinese politics is not an attempt at self-sufficiency, as the Wall Street Journal described, but a simple shift to new partners and opportunities in the global market.
The impact of global political conflicts between China and the U.S. will not only affect current corn imports but also shape future predictions. Overall, the ideological and political clashes between the two countries have been largely shaped by their economic needs (Tao, 2022). U.S. farmers will be less positive about future production, which will reduce investments in grain imports. This will reduce output per land and decrease overall corn productivity. It can also affect the price, but the impact is ambiguous.
Cultural Changes
The expanding middle class and shifting eating habits in China have driven a cultural shift, raising demand for meat and maize for animal feed. This change affects grain prices and trade patterns worldwide, as well as the agricultural environment in China. Global agricultural behavior has also changed over the years in both China and the US (Zhan, 2022). As discussed previously, many countries, including China and Mexico, are experiencing increased demand for livestock feed and are trying to reduce imports from the U.S. The point, however, is that current needs and trends will not allow them to alienate themselves from American trade completely. Thus, the cultural change will not directly shift perceptions.
References
Fosu, P., & Wahl, T. I. (2020). Empirical analysis of U.S. bilateral corn trade: Evidence from Japan, Mexico, China, South Korea, and the European Union. Cogent Economics & Finance, 8(1).
Hill, C. (2021). International Business: Competing in the Global Marketplace (13th ed.). McGraw-Hill.
Lohmar, B. (2023). Will China’s Corn Imports Continue?. Choices, 38(3).
Li, Y., & Li, J. (2021). How does China’s economic policy uncertainty affect the sustainability of its net grain imports?. Sustainability, 13(12).
Tao, W. (2022) China and America: Destined for conflict? Springer Nature Singapore.
WSJ Explains. (2023). How the U.S. could lose $5 billion of corn exports to China. Wall Street Journal Video.
Zhan, S. (2022). The political economy of food import and self-reliance in China: 1949-2019. Global Food History, 8(3), 194-212.