Analysis of China’s Soybean Import: Based on the Perspective of Welfare Economics

Abstract

China’s soybean import meets the growing nutritional demand of Chinese residents, but the continuous increase in soybean import quantity has also caused disputes about over import. The continuous importation of soybean in China gradually forms a path dependence on some major exporting countries. On the analytic basis of soybean supply and demand in China, this paper employs CR index and HHI index to measure the import concentration of soybean, and analyzes the monopoly pricing mechanism of international soybean by adopting welfare economics method. The results show that the imported soybean has gained strengthened monopoly in China’s market, thus increasing the risk of consumers’ welfare in loss. From the demand perspective, the loss of consumer welfare can be reduced by lessening soybean demand and increasing demand elasticity. From the perspective of supply, the same objective can be also achieved by increasing market competition in diversification and reducing monopoly transaction costs. As a result, some policy suggestions can be thus put forward: firstly, it’s suggested to control the importation of soybean and augment the imported alternative products. Secondly, it’s recommended to reduce the transaction cost of the major exporters to China, and to promote an imported strategy in diversification by strengthening the cooperation with countries that join in the “belt and road initiative”.