Grain Prices, Land Rent, and Food Self-Sufficiency in China

Two approaches to reform of agricultural prices in China are compared, one involving a two-tier combination of plan and market pricing, the other relying on land rent to recoup the tax on agriculture implicit in the two-tier system. The principal finding is that given the Chinese government's commitment to maintaining the real incomes of urban workers, an immediate move to land rents and unified pricing would be unsustainable. A gradual transition to unified pricing from an interim two-tier base is therefore recommended.