Liquidity of China’s agricultural futures market: measurement and cross-market dependence

PurposeThis paper aims to present the first empirical liquidity measurement of China’s agricultural futures markets and study time-varying liquidity dependence across markets.Design/methodology/approachBased on both high- and low-frequency trading data of soybean and corn, this paper evaluates short-term liquidity adjustment in Chinese agricultural futures market measured by liquidity benchmark and long-term liquidity development measured by liquidity proxies.FindingsBy constructing comparisons, the authors identify the seminal paper of Fong, Holden and Trzcinka (2017) as the best low-frequency liquidity proxy in China’s agricultural futures market and capture similar historical patterns of the liquidity in soybean and corn markets. The authors further employ Copula-generalized autoregressive conditional heteroskedasticity models to investigate liquidity dependence between soybean and corn futures markets. Results show that cross-market liquidity dependence tends to be dynamic and asymmetric (in upper versus lower tails). The liquidity dependence becomes stronger when these markets experience negative shocks than positive shocks, indicating a concern on the contagion effect of liquidity risk under negative financial situations.Originality/valueThe findings of this study provide useful information on the dynamic evolution of liquidity pattern and cross-market dependence of fastest-growing agricultural futures in the largest emerging economy.

Economic analysis of the environmental sustainability of agriculture: recent studies using quasi-experimental methods

PurposeThe purpose of this review article is to demonstrate how the quasi-experimental approach has been used to study environmental and natural resource issues related to agricultural production.Design/methodology/approachThis review article first provides a short introduction to the quasi-experimental approach using the potential outcomes framework and then uses studies on the environmental sustainability of agricultural production to illustrate how quasi-experimental methods have been applied. Papers reviewed consist of studies that estimate the environmental externalities from agricultural production, evaluate agri-environmental and other related policies and programs, and demonstrate issues related to on-farm resource use and climate adaptation.FindingsDifference-in-differences (DID) and two-way fixed effects methods that utilize the spatial and temporal variation in panel data are widely used to estimate the causal impact of changes in agricultural production and policy on the environment. Utilizing the discontinuities and limits created by agricultural policies and regulations, local treatment effects on land and other input use are estimated using regression discontinuity (RD) or instrumental variable (IV) methods with cross-sectional data.Originality/valueChallenges faced by the food systems have made agricultural sustainability more critical than ever. Over the past three decades, the quasi-experimental approach has become the powerhouse of applied economic research. This review article focuses on quasi-experimental studies on the environmental sustainability of agriculture to provide methodological insights and to highlight gaps in the economics literature of agricultural sustainability.

Evolution of the rural social security system in a large country over 35 years: institutional transformation and the Chinese experience

Purpose This paper aims to review the institutional evolution of China's rural social security system in the past 35 years, focusing on major policy transformations of the rural social security system in a large country, and extract the Chinese experience on developing rural social security.Design/methodology/approach This paper systematically reviews the evolution of rural social security system via organizing policy documents, key events and research literature on the construction of rural social security since the Reform and Opening-up.Findings First, institutional transformation is a profound change in China's rural social security system; second, policy transformation has taken place in the main areas of China's rural social security system, including rural endowment insurance, medical insurance and social assistance; third, the policy evolution of China's rural social security system has a unique experience in a large country.Originality/value China is the country with the largest rural population in the world. The process and experience of transforming the social security system in the vast rural areas of China have important value and reference significance for other developing countries.

Environmental regulation and location dynamics of the livestock industry: evidence from 279 Chinese prefecture-level cities

PurposeThis paper examines the impact of livestock environment regulations (LERs) on the location dynamics of the livestock farming industry. Specifically, it tests whether a “pollution haven effect” (PHE) exists in the Chinese livestock industry.Design/methodology/approachThe authors manually collected LERs data based on the frequency of livestock-related vocabulary in government work reports from 279 prefecture-level cities from 2010 to 2017. Using China's implementation of LERs since 2014 as a natural experiment, the authors employed difference-in-difference (DID) to avoid the endogeneity problem.FindingsLERs have led to a decline in livestock production in regulated areas. Moreover, compared with areas with more stringent LERs – southern China and developed areas, areas where LERs are less stringent – northern China and undeveloped areas, attract more livestock industry. As a result, people in northern China and undeveloped areas are exposed to higher livestock pollution.Originality/valueFirst, most empirical studies on PHE focus on industrial firms. PHE in the livestock industry has received limited attention. This paper aims to fill this gap. Second, this paper regards LERs as an endogenous process and uses the DID method to generate unbiased results. Third, this paper introduces a novel measurement of LERs based on the frequency of livestock-related vocabulary in government work reports from each prefecture city. Fourth, this paper uses prefecture-level data to analyze the PHE of LERs, and thus obtains more reliable results.

The effect of grassland transfer on herders' livestock production and grazing intensity in Inner Mongolia and Gansu, China

Purpose The purpose of this study is to understand the impact mechanism of grassland transfer on herders' production behaviour in pastoral areas. The impact of grassland transfer on herders' livestock production and grazing intensity is quantified.Design/methodology/approach Using the survey data collected for 356 herder households from Inner Mongolia and Gansu, China, quantile regression is employed to assess the heterogeneous effects of grassland transfer on livestock production and grazing intensity. To correct the potential self-selection bias of grassland transfer, the propensity score matching technique is used.Findings Results show that labour, percentage of livestock income and livestock stock are the main factors affecting herders' choice to transfer grassland. The positive effect of grassland transfer on livestock numbers on behalf of those who rented additional grassland is statistically significant but declines with livestock numbers. The sustainability-enhancing effect of grassland transfer on grazing intensity is significant, and the effect becomes larger amongst herder households with higher grazing intensity. The analysis on the impact mechanism shows that grassland transfer significantly promotes the adoption of sustainable grazing modes, such as rotational and seasonal rest grazing, which in turn increases herders' livestock numbers and decreases grazing intensity.Originality/value Few studies have empirically analysed the influence of grassland transfer on livestock numbers and grazing intensity. This study fills this gap by employing a quantile regression to assess the heterogeneous effects of grassland transfer on livestock numbers and grazing intensity, while accounting for self-selection bias. In addition, the authors have examined the influencing mechanisms under which grassland transfer impacts on livestock numbers and grazing intensity.

Are there dynamic productivity gains from agricultural trade?

PurposeThe primary purpose of this paper is to take an in-depth look at the question of whether liberalizing trade in agriculture can generate dynamic productivity gains comparable to those in the manufacturing sector.Design/methodology/approachIn contrast to the manufacturing sector that has generated firm/plant-level trade data, there is a lack of farm-level trade data that are needed for empirical measurement of dynamic productivity gains. Therefore, the authors use thought experiments to analyze the sequence of events that would occur when trade is liberalized for agriculture; delineate the expected behaviors of the actors involved in the trade and draw inferences about whether there would be dynamic productivity gains from agricultural trade.FindingsThe central finding is that there would be little dynamic gain from agricultural trade at the farm level due to the limited role of producers in shaping their international competitiveness. Yet, agricultural trade may generate dynamic gains if states or input supply corporations respond to the freer trade environment by making more investments for research and development (R&D). Further, when intraindustry prevails, there can be productivity gains at the industry level due to the transfer of resources from less to more efficient farm producers.Originality/valueThe findings of the paper are expected to present insights into value for researchers working in the area of agricultural trade; for agricultural trade policymakers in developing countries and for trade negotiators engaged in reforming or designing World Trade Organization (WTO)’s trade rules for agriculture.

The influence of clan social capital on collective biogas investment

PurposeThe purpose of this paper is to examine the influence of clan social capital on the willingness to pay (WTP) and WTP value for collective biogas investment.Design/methodology/approachUsing the Heckman two-stage model and a dataset of 1,265 representative observations from three provinces in Central China collected in 2019, this paper utilizes the contingent valuation method to estimate households' WTP value for collective biogas investment. The paper also explores the heterogeneity between households with different clan governance mechanisms and village governance structures.FindingsThe results indicate that clan networks and trust were likely to improve farmer households' WTP, while clan trust and norms could improve their WTP values. For clans with councils and for clans that can influence the decision-making of village committees, their members were more likely to be influenced by the social capital of their clans to pay for collective biogas investment.Originality/valueThis paper focuses on the WTP and WTP values of households for collective biogas investment, which is often neglected in the research. This paper suggests that clans can be used as a medium to urge households to increase their collective power to reduce carbon emissions and climate crises. The findings empirically contribute to efforts to reduce rural carbon emissions.

Homestead reduction, economic agglomeration and rural economic development: evidence from Shanghai, China

PurposeThe contradiction of construction land in economically developed regions is becoming more prominent, and the scale of construction land in some large cities is close to the ceiling. Therefore, China implemented the policy of construction land reduction in 2014. The main objective is to optimize the stock of homesteads and then help to realize rural revitalization by transferring land indexes across regions. Shanghai took the lead in implementing the reduction policy in 2014, for which reduction acceptance data are available. Thus, this paper evaluates the impact of homestead reduction on rural economic development based on data from towns in Shanghai.Design/methodology/approachThis paper uses the difference-in-difference (DID) model to analyze the policy effects of homestead reduction on rural residents' income and industrial integration development. Using economic agglomeration (EA) as a mediating variable, the authors explore how homestead reduction (HR) promotes EA to drive rural economic development and analyze the impact of geographic location and government investment.FindingsHR significantly promotes rural economic development and shows a significant cumulative effect. In the long run, HR can improve rural residents' income and promote industrial integration by promoting EA. The positive effect of HR and EA in suburban regions on industrial integration development is gradually increasing. However, the incentive effect on rural residents' income is weakening. The positive mediating effect of EA is significantly higher in regions with low government investment than in regions with high government investment.Originality/valueThis paper contributes to testing the impact of HR policy on rural economic development and can provide a reference for other regions aiming to implement reduction policy.

The impact of land certification on cropland abandonment: evidence from rural China

PurposeThis study explores how the land tenure system helps in protecting land quantity during agricultural production by estimating the influence of land certification on cropland abandonment, its mechanisms and its heterogeneous effects among groups at the provincial, community and household levels.Design/methodology/approachTo deal with potential homogeneity concerns, the authors investigate the impact of land certification on the area of abandoned croplands using nationally representative panel data from the 2017 and 2019 China Rural Household Panel Survey on 15,000 households across 29 provinces and time-varying difference-in-differences and propensity score matching-difference-in-differences models.FindingsLand certification significantly contributes to the protection of land quantity during agricultural production, and it reduces the area of abandoned croplands by at least 4%. This effect is mainly achieved by improving soil fertility, promoting land transfer, increasing the availability of agricultural subsidies and raising agricultural income. However, while land certification benefits farmers in nonmajor grain-producing areas and western regions, in plain, remote and nonpolitically central villages, and farmers who have not undergone land transfer or land adjustment, it is not beneficial for others.Research limitations/implicationsIn the postepidemic era, food security based on the protection of the amount of cultivated land becomes increasingly important. It is realistic and inevitable to rationally use every inch of cultivated land and curb the cropland abandonment by strengthening land tenure system reform, especially in the case of the insecurity of land tenure.Practical implicationsThere are various factors affecting farmers' cropland abandonment, such as poor soil fertility, unavailable land transfer, too little agricultural subsidies and too low agricultural income, but the root cause is the insecurity of land tenure. Empirical evidence from rural China has shown that a clear definition and effective protection of property rights can help curb the cropland abandonment. Enhancing the land protection behavior of farmers through the reform of land certification and promoting the sustainable use of land are what the reform of land tenure system should be.Social implicationsCultivated land, as the material carrier and endowment basis of grain production, is of great importance to safeguarding national food security, especially in the postepidemic era. At the present stage, it is still necessary for most developing countries to strengthen the construction of land tenure system, to carry out land certification reform and to issue farmers with clearly defined and legally effective land certificates. Equally important, efforts also should be made to promote the diversified utilization of the achievements of the certification after the completion of land certification reform in China and other developing countries.Originality/valueExpropriation and occupation of croplands are essential in protecting land quantity during rapid urbanization, and so is reducing cropland abandonment during agricultural production; therefore, it deserves close attention. In this regard, this study estimates the impact of land certification on the area of abandoned croplands, examines its possible mechanisms and identifies its heterogeneous effects to test the applicability of the property rights theory in the Chinese context and enrich the relevant literature and provide Chinese evidence for other developing countries to strengthen the protection of land quantity, by deepening the reform of the land tenure system under different circumstances.

Digital financial inclusion and vulnerability to poverty: evidence from Chinese rural households

PurposeDigital finance has the transformative power to realise financial inclusion. However, evidence on the relationship between digital finance and poverty reduction remains limited. This study examines the mitigating effects of digital financial inclusion (DFI) on vulnerability to poverty in rural China, explores potential mechanisms at the micro-level, and investigates the external conditions for DFI to validate these effects.Design/methodology/approachRural household data from the China Labour Force Dynamics Survey and the regional DFI index compiled by Peking University are used. The probit and mediation effect models are employed to assess the impacts of the DFI on vulnerability to poverty and explore its mechanisms, with an appropriate instrumental variable to mitigate potential endogeneity.FindingsDFI can mitigate vulnerability to poverty in Chinese rural households. Specifically, both sub-indices – coverage breadth and depth of use – have a significant effect. Further analyses based on the mediation model show that improving agricultural productivity, stimulating entrepreneurial activities and promoting non-agricultural employment are the core mechanisms for alleviating poverty vulnerability. Heterogeneity analysis shows that DFI is pro-poor and benefits those who lack economic opportunities. Moreover, adequate endowment in rural households, such as production and human capital, is an external condition for digital finance to mitigate vulnerability to poverty.Originality/valueThis study is among the first to examine the vulnerability-mitigation effects from the perspective of digital finance development, relying on data from a large-scale, nationwide household survey and the regional DFI index. It also checks for the mechanisms and heterogeneity of the effects, which prove the effects can help balance efficiency and equity.