ABSTRACT
The Chinese government has pursued distinctly different policies to meet the food grain needs of urban and rural households. In rural areas the policy has been to buy grain from but not sell to the rural sector, thus requiring rural households to meet their own needs. In urban areas a system of coupon-based rationing was followed, up to 1993 at least; and thereafter in most cities a subsidy system operated with the focus on lower income residents. In essence, the price signal for rural households was the state grain purchasing price which represented the opportunity cost of food grain consumption. Producing food grain for subsistence needs has been and remains a primary concern of Chinese agricultural households. The reasons for the predominance of this type of agriculture include low farm labour productivity and basic weaknesses in the grain marketing infrastructure.
