The team, led by Yitian Shao with Jiqiang Zhao and Lijun Cheng, first used a random forest approach to select the variables that matter most for the analysis. On that foundation they built a dynamic stochastic general equilibrium, or DSGE, model to investigate self-sufficiency dynamics under random disturbances.

The model’s structure reflects key features of China’s rural economy. It includes two types of heterogeneous households, farm households and general households, and three production sectors: a staple food sector, a soybean sector and a non-grain sector. This division matters because the transformation of the grain demand structure and the upgrading of residents’ dietary patterns carry the risk of short-term demand surges, a concern sharpened by the frequent occurrence of geopolitical conflicts and natural disasters.

Into this framework the researchers introduced seven categories of exogenous shocks: demand shocks for staple food and for soybeans, production technology shocks for both grain types, production subsidy shocks, and agricultural machinery purchase subsidy shocks aimed at farm households. By simulating each shock separately, the model can isolate which disturbances drive short-term volatility and which shape long-run trends in output and self-sufficiency.

The simulations point to sudden demand shocks as the primary factor driving short-term fluctuations in grain prices. These surges affect the real purchasing power of residents and also erode the grain self-sufficiency rate. This finding is relevant to a governance environment marked by geopolitical conflicts and natural disasters that can trigger abrupt shifts in demand or supply.

Over longer horizons, however, the picture changes. Production technology shocks emerge as the fundamental force underlying the long-term evolution of grain output and the self-sufficiency rate. Positive technology shocks significantly raise the self-sufficiency rate and improve residents’ consumption welfare, a result the authors say highlights the core role of technological progress in safeguarding national grain security.

The study also evaluates two policy instruments, and finds they work through distinct mechanisms and time frames. Production subsidies deliver direct and rapid effects, stabilizing grain output and ensuring supply in the short run. Agricultural machinery purchase subsidies act more slowly, focusing on enhancing systemic resilience through long-term capital accumulation on farms. The two policies are therefore heterogeneous in both mechanism and time effectiveness, rather than interchangeable tools.

Because the results come from a simulation model rather than observed policy experiments, they represent model-based estimates of how these shocks and interventions propagate through the economy, not direct measurements of past outcomes. Even so, the authors argue the framework provides a dynamic quantitative basis for optimizing China’s agricultural support policy system and for systematically strengthening grain security capacity in a complex and volatile domestic and international environment.

Subject of Research: Demand structure transition, policy interventions and China’s grain security: A DSGE-based investigation of self-sufficiency dynamics

Article Title: Demand structure transition, policy interventions and China’s grain security: A DSGE-based investigation of self-sufficiency dynamics

Article References: Shao, Y., Zhao, J., & Cheng, L. (2026). Demand structure transition, policy interventions and China’s grain security: A DSGE-based investigation of self-sufficiency dynamics. Humanities and Social Sciences Communications. https://doi.org/10.1057/s41599-026-09212-6

Image Credits: AI Generated

DOI: 10.1057/s41599-026-09212-6

Keywords: Demand, structure, transition, policy, interventions, China, grain, security, DSGE-based, investigation, self-sufficiency, dynamics