The Impact of China’s Grain Reserve System on Import Demand

In the fall of 1992 an academician at the Chinese Academy of Social Sciences reported that China’s grain stocks for 1990 were 491 million tonnes (Wen Guifang, 1992). The new estimate raised several important issues: How do China’s statisticians define stocks? Who are the stockholders and what are the relationships between them? How do stocks relate to grain imports and exports. Why does China import grain when it has large stocks? Why do farmers hold large stocks? What factors influence stock holding? Under what conditions might grain stocks be reduced and how might stock increases or decreases affect China’s grain imports or exports? In the coming decades, stocks likely will decrease slowly as economic reforms continue, grain markets become more efficient, transportation lines are improved, and financial markets become established.