Does economic policy uncertainty undermine stability of agricultural imports? Evidence from China

Abstract

China is the world’s largest importer of agricultural products. Stability of agricultural imports directly affects domestic food availability, and hence influences national food security. This study is important to gauge effects of uncertainty resulting from global and domestic economic policy changes on the stability component of food security in China. Though many studies have explored the determinants and consequences of Chinese agricultural trade, research focusing on stability of agricultural imports is lacking. To fill the gap, this study calculates duration length and survival probability of China’s agri-food imports, and estimates effects of economic policy uncertainty (EPU) on the stability. Results show that trade duration of the agri-food imports is 12.07 months in China. However, 51.69% of disrupted trade relationships would resume after 2 months and 92.68% of temporarily interrupted trade relationships return to the market after 12 months. Empirical estimations show that global EPU has a larger impact on the stability of agricultural imports than Chinese EPU. Although Chinese EPU has heterogeneous effects on imports of different agri-food products in China, global EPU does not. Stabilized domestic food price and improved domestic agricultural productivity would improve stability of the imports significantly. The study concludes that China’s agricultural imports are less dynamic than previous studies claimed. However, EPU significantly erodes the trade stability. To offset negative effects of EPU on the stability, government should pay more attention on stabilizing domestic food price volatility and increasing food productivity, and therefore improve food security in China.

Economic policy uncertainty, intra-industry trade, and China’s mechanical and electrical product exports

“…The coefficient of our key explanatory variable lnEPU is negative and statistically significant, indicating that EPU in destination markets significantly suppresses the exports of mechanical and electrical products, which verifies Hypothesis 1. This conclusion is consistent with the findings of the literature [ 38 , 39 ].…”

Natural disasters and agricultural trade in China: analyzing the role of transportation, government and diplomacy

“…Recently, Zhang et al . (2022a, b) confirmed the negative effects of multi-hazard meteorological disasters, droughts, floods, typhoons and hail on agriculture in Jilin Province, China within 1978–2020.…”

“…(2019) and Zhang et al . (2022a, b), this study specifies Equations (6) and (7) to measure the mediating role of government and diplomatic relations, respectively, in the effect of natural disasters on the duration of agricultural production import in China. Equation (8) estimates the moderating roles of both two variables together.where (NatDe×GovEf) is the interactive term of natural disasters and government effectiveness, and (NatDe×DipRe) is that of natural disasters and diplomatic relations.…”

Asymmetric Effects of Economic Policy Uncertainty on Food Security in Nigeria

“…In line with this, Abdulai and Kuhlgatz (2012) reviewed the concept of food security and the various approaches developing countries have used to promote food security. Zhang et al (2022) evaluated the effects of uncertainty resulting from global and domestic economic policy changes on the stability component of food security in China. Zhu et al (2020) investigated the effect of economic policy uncertainty (EPU) on China's agricultural and metal commodity futures returns across quantiles.…”