China is perhaps the most prominent example of a developing country that has transitioned from taxing to supporting agriculture. In recent years, Chinese price supports and subsidies have risen at an accelerating pace after they were linked to rising production costs. Per-acre subsidy payments to grain producers now equal 7 to 15 percent of those producers' gross income, but grain payments appear to have little influence on production decisions. Chinese authorities began raising price supports annually to bolster incentives, and Chinese prices for major farm commodities are rising above world prices, helping to attract a surge of agricultural imports. U.S. agricultural exports to China tripled in value during the period when China's agricultural support was accelerating. Overall, China's expansion of support is loosely constrained by World Trade Organization (WTO) commitments, but the country's price-support programs could exceed WTO limits in coming years. Chinese officials promise to continue increasing domestic policy support for agriculture, but the mix of policies may evolve as the Chinese agricultural sector becomes more commercialized and faces competitive pressures.

Extract: The Agriculture and Food Act of 1981 authorizes many farmprograms for 4 years. This report summarizes its provisions by title. Commodity program provisions discussed for wheat, feed grains, cotton, rice, peanuts, soybeans, sugar, dairy, and wool and mohair include price supports, loan levels, disaster payments, and program acreage. Other provisions summarized include miscellaneous; grain reserves; the national agricultural cost of production standards review board; agricultural exports and P.L.-480; food stamps; research, extension, and teaching; resource conservation; credit, rural development, and family farms; floral research and consumer information.