China has been pursuing an open economy since the 1980s. But China's agriculture is neither well developed nor competitive. China's domestic market is relatively open, so foreign farm products can enter the Chinese market with fewer barriers than other countries, such as Japan and South Korea. If we recognize that China's industrial development has benefited from foreign competition, we should also admit, sooner or later, that China's agricultural development may not do the same with stiff competition from foreign agricultural imports.

The truth is, no matter how fast China's GDP growth is, its net farm income is always the most important indicator for the entirety of China's economic development, not just for farm sector well-being. There is no case of a nation with a developed economy and an underdeveloped agriculture sector. On the contrary, the lesson we have learned from the U.S. economy is that U.S. farming incomes have continued to break records -- especially in recent years, even though the overall U.S. economy was in recession or slowly recovering. Indeed, agricultural exports have served as one of the top two engines driving U.S. trade growth in the last two years.

Chinese consumers are deeply concerned about genetically modified products, which mainly apply to imported soybeans and corn. If Chinese consumers are more dependent on imports for soybean consumption, and if Chinese soybean growers give up farming, the real challenge is not just food supply but food security. Nevertheless, today some farm products such as soybeans and corn have become widely recognized as import dominated and domestically disadvantaged corps. The Chinese government and policy makers have already recognized and faced such challenges.

With a privileged RMB exchange rate, China's farm imports are expected to increase further. Because of technology, improved productivity and subsidies, U.S. agricultural products are less expensive and more competitive. This will impose a certain pressure on China's trade policy with regards to agricultural imports. But for agricultural products, an open market is less important than a protected market. In the short term, maintaining a certain domestic share of agriculture products is absolutely essential for China's continuing economic sustainability.

It is safe to say that China's on-going pursuit of an open economy bring its agricultural sector increasingly stiff competition from the United States, the EU, and its major Asian trading partners. However, the real challenge for China is not defending its trade partners, but to improve the competitiveness of China's domestic agriculture. China's future economic development requires reliable domestic agricultural production. For this, the Chinese government must launch a national strategy as well as practical programs to promote agricultural development.

I recently traveled to Weifang in Shandong Province, the largest and best known green vegetable production area in China. During the trip, I visited the recently launched "China Food Valley." There I found considerable ambition and confidence on a local level. For a strategic sector like agriculture, big differences can only be made in Chinese agriculture if governments and markets work together.

The author is a columnist with China.org.cn. For more information please visit: http://www.ccgp-fushun.com/opinion/zhanglijuan.htm

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