With a 2010 population of more than 1.35 billion people, China is home to roughly 20 percent of the world’'s inhabitants. This fact alone makes China’'s demand for agricultural products a huge factor in how world prices for agricultural commodities behave. However, not only is China’'s percentage of world population large, its share of world GDP is growing. With China’'s real GDP expressed in U.S. dollars more than doubling from 2003 to 2010, China’'s share of world GDP has increased from 4.0 percent in 2002 to 7.4 percent in 2010. Considering that agricultural producers in China are also facing constraints on the availability of land and water that will make it difficult to sustain large increases in their agricultural production base, large jumps in demand for agricultural products within China could have profound effects in world markets, affecting other nations who are major suppliers or major importers of these goods.
This study analyzed the direct & indirect impacts of agriculture trade and Korean economy by the structural change of China in supply & demand sides through the linkage between Chin Agriculture Policy Simulation model(CAPSIM), Food & Agricultural Policy Research Institute(FAPRI) world model at the University of Missouri-Columbia in U.S. and Korea Agricultural Simulation Model(KREI-KASMO).
Through the co-project between Chinese Academy of Agricultural Sciences(CAAS) and KREI, We tried to forecast 10 years base's long-term China agricultural supply-demand based on CAPSIM including 13 items in order to better understanding Chinese agriculture and agricultural policies on Korea agriculture. Unfortunately, CAPSIM did not cover on vegetables and Fruits yet, We tried to build structural models on these items and added this modules to CAPSIM to predict future.
On the other hand, through the co-project between Food & Agricultural Policy Research Institute at the University of Missouri-Columbia (FAPRI-MU) and KREI, This study calculated the world impacts on the China demand's structural change in terms of prices and trade volumes. This analysis considered how a 10 percent increase in China’'s domestic consumption of seven different commodities (rice, corn, wheat, soybeans and soybean products, beef, pork and chicken) would impact world prices for these products, internal Chinese prices, and production and consumption of these goods within China as well as the rest of the world. An additional
study is conducted in which China’'s real GDP is allowed to increase 10 percent in order to assess the changes from stronger than expected income levels in China. It is important to note that this analysis assumes that any increases in China domestic consumption above and beyond production increases result in increased net imports. While the government has a history of using trade barriers to protect China’'s domestic industries (some industries have been protected more than others), this analysis assumes that all additional demand will be met by increases in Chinese production or more imports. No assumptions are made about increased levels of trade protection.
We anticipate that this study is meaningful first stage project as a part of establishing the world model in KREI to prepare the various FTAs and Global agriculture supply-demand projection on world grain outlook for stabilization of domestic price.

Researchers: Suk-Ho Han, Hyung-Jin Jeon, Jun-Ho Seung
Research Period: 2011. 1 ~ 2011. 10.
E-mail Address: shohan@krei.re.kr, hjchon@krei.re.kr, jhseung@krei.re.kr