Reforming Intellectual Property Rights, Bio-safety Management and the Bt Cotton Seed Industry in China: Who Benefits from Policy Reform?

China has been one of the leaders in agricultural biotechnology research and the adoption of transgenic plants. Despite this, critics argue that Chinese biotechnology policies could be improved to provide more benefits to farmers and more incentives to companies for greater research. The objective of the paper is to examine if policy changes could improve the welfare of producers and consumers and others in the cotton industry. The paper first reviews recent changes in laws and policies that affect China's plant biotechnology sector, IPR legislation, changes in bio-safety regulation and seed industry reforms. Next, using a primary data set collected from more than 1700 plots from a sample of farmers in northern China in 1999, 2000 and 2001, we econometrically estimate the effect of changes to intellectual property rights (IPR), bio-safety regulation and seed industry reform on farmer pesticide use and yields. The results are used as the basis of a simulation exercise designed to measure the size and distribution of the benefits (and costs) of reform. We find that improvements to the IPR environment, enhanced enforcement of China's bio-safety management regulation and greater commercialization of the seed industry positively affect the benefit of producers, consumers and technology providers.