The Impact of the Economic Liberalization on Grain Production in Mainland China

This paper attempts to provide a comprehensive evaluation of the influence of the economic reform since 1978 on production of grain and the food security in China. By applying Autoregressive Distributed Lag (ARDL) Model with a pooled mean group (PMG) estimation and several panel unit tests. The empirical result demonstrates that a negative relation between foreign direct investment (FDI) and the production of grain exists. Mechanization and chemical fertilizer also influences grain yield significantly in both short term and long term. The degeneration of typical production of agriculture becomes a threat to food self-sufficiency and food security in China. This study suggests that liberalization, for example, free trade agreement (FTA) of agricultural product, should be restricted if the government would like to foster domestic agriculture. This research further suggests that the agricultural sector should be treated independently from the other sectors because of its direct relation to maintain an appropriate level of self-sufficiency of food.