This paper examines the extent to which Chinese farmers are connected to regional agricultural
markets by looking at the intensity of price transmission from retail markets to the farmgate. This
intensity is indicative of the extent to which farmers might benefit from improved marketing
opportunities and be exposed to price risks. We estimate the elasticity of farmgate prices to retail
prices using price data for 170 markets, in 29 out of 33 provinces of China, at the detail of 12
main products and for the five-year period 1996 to 2000. In each province we find strong linkages
between retail and farmgate prices with elasticities ranging between 0.6 and 1 and intensifying
over time. This suggests that Chinese farmers are generally well connected to retail markets and
that this connectivity has strengthened in the period considered, creating new opportunities but
also new risks. It is also found that linkages are relatively weak in inland provinces, which is a
point of concern in view of Chinese policies to create equal opportunities and equitable growth.