Agricultural Policies

Paper

China’s New Farm Subsidies

United States Department of Agriculture (USDA), Outlook Report No. (WRS0501), February (2005)

In 2004, China entered a new era in its approach to agricultural policy, as it began to subsidize rather than tax agriculture. China introduced direct subsidies to farmers, began to phase out its centuries-old agricultural tax, subsidized seed and machinery purchases, and increased spending on rural infrastructure. The new policies reflect China’s new view of agriculture as a sector needing a helping hand. The subsidies are targeted at grain producers, but they do not provide strong incentives to increase grain production.

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