During the past twenty years, China has experienced enormous economic growth, profound institutional reforms, and a fundamental transformation of society. As a result, farmers have become independent entrepreneurs and free markets for agricultural products and inputs have started to develop.Changes in consumption patterns and the opening of markets has led to a shift in production mix towards products in which China has comparative advantages, i.e. away from grain production towards labor intensive cash crops such as fruits and vegetables. In line with the aim of the Chinese agricultural policy of keeping the country self sufficient in grain, the government is still involved in the marketing of grain, and it controls, too, the production and marketing of such respective inputs as seed and fertilizer.Being a country of low arable land per capita, Chinese agriculture operates on a high yield level and there is a relative intensive use of labor, fertilizers and pesticides. In recent years, application of agricultural inputs has further expanded, and it is likely that this trend will continue as the economy grows further.