Sustaining food security has always been one of the most important goals for governments at all levels in China. Since the second half of 2006, prices of agricultural commodities on the international and domestic markets kept soaring, which had negative effect on some households, especially the low-income households in China. Food prices registered relatively slow increase in 2005 (by 2.9 percent) and 2006 (by 2.3 percent), before suddenly shooting up to an annual jump of 12.3 percent in 2007. Meanwhile, rural areas reported even bigger food price rise (11.7 percent in cities and 13.6 percent in countryside). The price of pork and poultry and their products rose by approximately 32 percent and that of eggs by 22 percent. Prices for cereals are set by the government and saw a steady, stable increase of 21 percent between 2006 and 2009, after controlling for inflation.

In response to the crisis, China increased agricultural investments by 27 percent in 2007, 38 percent in 2008, and another 20 percent this year. No other big country, with the exception of India, has raised agricultural budget to this extent (The Financial Times Limited 2009). In 2008, China increased export duties on major crops, such as wheat, barley, and rice. The government also increased minimum support prices for different varieties of rice. Other agricultural input subsidies, such as on prices of fertilizers, have also been introduced (FAO GIEWS 2009).

Overall, China’s policy response to the crisis has been praised globally. It has given an opportunity to the country to pay more attention to food security issues. Overall, China considers itself mostly self sufficient and food secure in the production of rice, wheat, and corn. (The Financial Times Limited 2009).