ABSTRACT
This chapter discusses two aspects of China's drive to modernise its agricultural industries value adding and vertical integration. It argues that misperceptions about both involve detrimental consequences that are rarely discussed in China. The term "value adding" comes from national accounts literature where it merely refers to the returns to the fixed factors of land, labour, capital and enterprise. The numerous products that derive from beef cattle, along with various levels of processing create a range of options for further processing. For local regions in China, the desirability of further processing depends on a number of factors. First, regions vary in their efficiency of producing and slaughtering/processing cattle. Application of the economic issues to the current market conditions prevailing in the Chinese beef industry cannot fully explain the targeting of large-scale enterprises. Perceptions about the relative merits of value adding have led to the Chinese government heavily targeting the value adding/processing sector.
