Research on high-quality development of China's agricultural insurance market and rural revitalization

Abstract

After the Rural Revitalization strategy was formally introduced as a national development priority in 2017, the Chinese government began focusing more on transforming the agricultural sector and improving rural household incomes. Agricultural insurance is an effective tool for managing risks in farming and advancing agricultural modernization. Despite rapid growth in China's agricultural insurance sector over the past two decades, structural challenges remain that affect its ability to achieve high-quality development. This thesis addresses three key research questions on how the agricultural insurance market can better contribute to the Rural Revitalization strategy. First, while insurance for staple crops receives significant government subsidies, support for cash crops and specialty agricultural products remains relatively limited. This thesis examines the effects of central government’s subsidy awards for specialty crop insurance that were implemented in 2019 and 2020. Using county-level panel data from 2011 to 2022, the analysis reveals that cash crops have become increasingly important in driving agricultural GDP growth. In provinces receiving these subsidies, the share of cash crops and agricultural GDP grew significantly compared to provinces without the policy. Second, although competition in China’s agricultural insurance market has increased, the market is still dominated by a few major players. This thesis investigates how regional competition in the agricultural insurance industry affects farmers' planting activities. Using household survey data and regional competition metrics from the China Insurance Industry Yearbook (2009–2017), the study finds that greater competition is linked to higher proportions of cash crop cultivation and increased farming expenditures. These results highlight the importance of promoting competition during local government bidding processes to drive further development in the market. Third, with many agricultural insurers engaging in Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) initiatives, this thesis evaluates the location choices and impacts of ESG practices by Company P. Findings indicate that Company P focuses on implementing ESG projects in cities farther from provincial capitals, where it has a larger market share and more property insurance outlets. These projects have significantly boosted Company P's local revenue and market share, as well as enhanced agricultural output and modernization in the counties where they were introduced. This demonstrates the potential of ESG practices to create mutual benefits for businesses and communities. The findings of this thesis contribute to improving the quality of China's agricultural insurance industry and provide insights into the country’s progress in poverty alleviation and agricultural modernization. Moreover, the results offer practical guidance for policymakers and industry stakeholders to enhance the role of agricultural insurance in supporting sustainable rural development.