Food security is a pillar of socioeconomic stability. Especially for a country like the People’s Republic of China (PRC), where 22% of world’s population shares 7% of world’s arable land.
From Beijing’s perspective, high quality food supply chain is necessary to prevent social disorder, maintain the stability of the country and, ultimately, the sovereignty of Chinese Communist Party. As president Xi Jinping said, “The Chinese people must hold firmly the rice bowl in their hands and filled it with Chinese cereals”[1].
Since Deng Xiaoping promoted the reform and opening-up policy in 1979, China’s GDP increased dramatically. Its economic rise enabled Beijing to improve food access across the country, which experienced a massive migration from rural areas to cities in the meantime. China’s undernourished population rate in 2015 was 9.3%, according to the Food and Agriculture Organization (FAO). A huge result compared to 23.9% calculated in 1990.
China is now 95% self-sufficient in cereals, with 664 million tons produced in 2019[2]. Besides, it is the world’s top producer and consumer of rice, the main staple food on Chinese dinner tables. The total global trade of rice is just 25% of country’s consumption[3].
Yet Chinese economic development unleashed new demographic and social challenges. PRC become the world's largest carbon dioxide emitter. A new middle class has emerged in the cities and a wide wealth gap between costal and inner regions persists. Besides, China relies also on exports to satisfy a large share of its food domestic demand. According to the World Bank, in 2018, food represented 6.3% of total product imported by the PRC, ahead of United States (5.9%). France, US, Netherlands and Australia are the top three food exporters to China[4]. That means that its food security may be vulnerable to exogenous threats in the long run.
Coronavirus outbreak first identified in Wuhan (Hebei) has exposed the abovementioned disparities between urban and rural areas, especially those linked to the quality of healthcare and food. Besides, the trade war with the US is driving Beijing to partially redraw its food supply chain.
Long-term impact of food insecurities on world geopolitics is an underestimated element of multifaceted Sino-US competition. Although China’s food security is not in danger, Beijing is strongly investing in new technologies and sustainable development to overcome its domestic weaknesses and turn food security in an opportunity to lead agricultural sector worldwide.
China’s geopolitics and agriculture
The Yangtze river defines the domestic constrains on and imperatives of China’s rulers since the imperial era, including those related to food security. The waterway has an essential role in defining PRC’s food production, which is basically located in the so called han-core, where the han ethnic group (over 90% of Chinese population) lives. The territory stretches from Shaanxi and Sichuan to Hebei and Guangdong and is centered on the Yangtze and Yellow river. The latter is the cradle of Chinese civilization and its center of power. About 40% of Chinese population lives in the rural areas, feeding the other 60% living in the cities, where GDP per capita is higher.
Yangtze connects east and west of the country and at the same time divide it into two geographical units: north and south. China become an empire when Qin Shi Huang (Qin dynasty) conquered the Yangtze Basin and gained access to southeast coast. Since then, keeping unity between above and below the river become a ruler’s top priority. Such a geopolitical pillar has many implications in terms of food security.
North China plain is well known for wheat fields and coal mines, especially in the Loess China Plain and Yellow river basin. The province of Central China (upper Yangtze), produces more rice than India. Sichuan is historically considered China’s granary. Yangtze supplies south of the country with rice, timber, tea and cotton. Southeast provinces like Guangdong, Fujian and Shanghai are China’s economic powerhouse.
Manchuria (Heilongjiang, Jilin and Liaoning) is well known for its mineral resources, but Heilongjiang (recently hit by a second wave of Coronavirus infection) is already China’s breadbasket, with 75 billion tons grain harvested in 2019. Xi wants to turn it into new Asia’s agricultural hub and integrate its development into the so called “Chinese dream” (Zhongguo meng) of “national rejuvenation”.
China’s food security challenges
Chinese domestic agricultural development faces standard quality issues and inefficiency.
More than 40% of China’s arable land suffered from degradation in 2014[5], due to a combination of industrial pollution, quick urbanization process and agricultural activities in unsuitable land. Water scarcity is another big issue. In 2016, Chinese Ministry of Water Resources stated that about 80% of country’s underground water was polluted. China ranks 23rd in the Global Food Security Index, while US is 3rd after Singapore and Ireland[6].
Small, land plots and unproductive farms are largely present in rural China and the domestic legal framework hinders the consolidation of farm size. With few quality controls, each farmer gives its products to brokers which then sell them to bigger distributors. In 2013, Chinese government introduced subsidies to enhance landholders and rural cooperation in order to bring the economies of scale to the countryside. But large-scale business is difficult without land transfer. The latter would mean expel millions of farmers from rural areas. Such a move would increase unemployment. Beijing would be obliged to provide them new benefits and impose more taxes on the rising middle class, which would require more rights and power in return. In sum, without a huge economic and political reform, this land transfer would produce more instability.
The spread of diseases like SARS, Covid-19 and African swine fever confirms that Beijing is facing difficulties in improving the quality of zootechnics. The origin of Covid-19 is still unknown, since there is no concrete evidence that the virus came from Wuhan Institute of Virology. Anyway, it is certain that it has spread in Huanan wet market, where wild animals were sold. Beijing wants to ban the sale of wild animals to gain the trust of the population.
Quality issues have repercussions on the supply chain. In 2019, mass slaughter of pigs due to African swine fever caused inflation of pork price and Chinese government introduced measures to stabilize the industry. Some enterprise saw an opportunity in the bacon bubble. Alibaba, NetEase and real estate companies such as Country Garden and Vanke decided to invest in the sector[7]. Still, domestic poultry doesn’t completely satisfy domestic demand. China’s pork import may reach record level of 4,6 million tones in 2020, according to Dutch financial services firm Rabobank[8].
In the last thirty years, PRC’s urbanization and the rising income level in the cities make the population gradually shifting away from the traditionally grain-oriented diet. Between 1985 and 2005, per capita consumption of milk increased tenfold, egg consumption increases eightfold. Besides, the PRC become largest consumer of meat in the world, with 75 million tons consumed in 2019. It is about 50 kg per capita, which is anyway 40 kg less than the United States. FAO expects that it will increase to 55 kg before 2026, with pork remaining the favourite meat[9]. Such a trend could drive China to boost domestic production and imports at the same time in order to satisfy population’s demand.
Targets and threats along the supply chain
Beijing plans to improve food security with several tools: agricultural mechanization; use of artificial intelligence and 5G in activities like field planting, livestock and poultry production, and fishery operations; implementation of regional scaled high-efficiency water-saving irrigation projects. The last one is necessary outside han-core region. In particular, Beijing aims to increase crop production in Manchuria, improve irrigation efficiency in the northwest (especially in Xinjiang) and reduce wastewater discharge in the south .
During the last decade, China’s investment in agricultural research and development increased dramatically. In 2017, Chinese application in this field had grown about 52.8%, while the United States reported a 2.9% decline. PRC invested about 26 billion dollars in 100 countries.
In 2013, Shuanghui group purchased Smithfield Foods, the larger pork producer in world, for 4,72 billion dollars. It has been the largest Chinese acquisition of an American company in history. Nowadays, such an operation would be highly unlikely, given the worsening of Sino-US relations.
Three years later, Blue River Dairy Group acquired Italian dairy manufacturer Alimenta, based in Sardinia (Italy). There, the Chinese company built a formula factory and sheep milk ingredient factory. Bluer River’s donation of medical supplies (worth about 340,000 dollars) to region’s hospital during Covid-19 epidemic is mostly due to this strategic investment rather than just altruism. The so-called “health silk road” (jiankang sichou zhilu) promoted by Beijing in the BRI framework aims to reject criticism about its cover-up and disinformation in the beginning of the outbreak in December and to make PRC become a global health leader.
In 2017, ChemChina acquired Syngenta, Swiss bases biotechnology company that produces agrochemicals and seeds. China can use its biotech expertise to improve domestic agricultural output in a sustainable way.
Investments in R&D are useless without an educated workforce able to develop new technologies. The increasing of Chinese graduates and publications in science and engineering comes with no surprise.
Relations with developing countries in Africa and Latin America represent a relevant piece of Beijing’s food security strategy. Since the seventies, China develops significant economic and military interests in the continent. Sino-African agricultural trade volume increased about tenfold from 2000 to 2018, reaching 6.92 billion dollars. Here is often accused of “land grabbing”, but the amount of land purchased or leased is smaller than generally believed. Between 1987 and 2014, Chinese investors would have acquired only 240,000 hectares of the previously estimated six million hectares, according to a research by Deborah Brautigam, director of the China Africa Research Initiative at Johns Hopkins University[10].
Besides, China is now much more interested in investments across the agricultural supply chain instead of overseas crop cultivation. Beijing’s goals are four at least: exerting larger influence on the supply chain; promoting Chinese technologies and agribusiness; increasing imports. The first Forum on China-Africa Cooperation in Agriculture, which took place in China in December 2019, is the latest example of Beijing ambitions in the continent.
The trade war started by the United States in 2017 prompted Beijing to redraws it agricultural supply lines. China started to import more soybean from Brazil and Argentina and more beef from New Zealand. In this way, it is compensating the share of those product previously imported from the United States. Soybeans, an ingredient in feed for swine, represents over the 60% of PRC’s vegetable import. Considering the rising tensions between Beijing and Washington, it is high likely that China will strive for diversifying its sources of food to be less dependent on American farms.
Australian agriculture has been severely hit by political and economic tensions between Beijing and Canberra. In May, PRC decided to suspend imports from four Australian abattoirs (about 35% of bilateral beef trade) and imposed anti-dumping tariffs on Australian barley. In the last three years, about 25% of Australian agricultural exports (or 11.8 billion dollars) went to China. Wool, barley and beef are the top three commodities sold.
China is Australia’s 2nd foreign agricultural land holder after the United Kingdom and before the United States. These three major powers are also the most important land trader in the world. Besides, Chinese enterprises are increasingly focused on R&D and agritech projects. China (Hong Kong included) has been the third largest investor in Australian agriculture forestry and fishing after United States and Canada.
Canberra may respond to Chinese tariffs increasing its criticism against Beijing on several issue. Namely its responsibilities in the pandemic outbreak, human rights protection in Xinjiang, South China Sea disputes and political penetration in Australia.
Agriculture as a geopolitical leverage
According to a United Nations, world population will increase by 2 billion persons in the next 30 years, from 7.7 billion to 9.7 billion[11]. In light of its significant role in worldwide food trade, China will probably take the chance to expand its global influence.
In the short-term, Beijing could take advantage of Qu Dongyu’s role as FAO director general. International organizations are a product of great power geopolitics. Entities like UN, International Monetary Fund, World Bank, World Trade Organization are a key component of the world order shaped by the US after the World Word II. Now China is trying to gain soft power in these institutions.
Qu may help China to impose its standards to the other members of the organization and manage the relationship with developing countries, especially in Africa. In the long run, Beijing can turn food security from threat to geopolitical leverage.
Notes:
[1] “Xi Jinping: Zhongguoren yao ba fanwan duan zai ziji shouli erqie yao zhuang ziji de liangshi” (Xi Jinping: The Chinese people must hold firmly the rice bowl in their hands and filled it with Chinese cereals), cctv.com, 15/10/2018.
[2] “Woguo guwu zigei lu baochi zai 95% yishang” (China's cereal self-sufficiency rate remains above 95%), Xinhua, 15/10/2019.
[3] “Guojia tongji ju guanyu 2019 nian liangshi chanliang shuju de gonggao” (Announcement of the National Bureau of Statistics on 2019 grain output data), China National Bureau of Statistics, 6/12/2019.
[4] Food imports (% of merchandise imports) – China, World Bank, 2018.
[5] “More than 40% of China's arable land degraded: report”, China Daily, 5/11/2014.
[6] Global food security index, Economist Intelligence Unit, December 2019.
[7] Swine Saviors? Real Estate Giant Goes Hog-Wild During Downturn.
[8] “China’s pork imports may hit record 4,6 million tons in 2020: Rabobank”, Reuters, 8/11/2019
[9] “Charts of the Day: China’s Growing Meat Consumption”, Caixin, 12/10/2018.
[10] C. Arsenault, «Chinese Firms Buy, Lease Far Less African Farmland than Thought – Book», 12/10/2015.
[11] “Growing at a slower pace, world population is expected to reach 9.7 billion in 2050 and could peak at nearly 11 billion around 2100”, United Nations, 17/6/2019.