The Hungry Dragon: China Looks Abroad To Satisfy Its Growing Appetite

Via The Sydney Morning Herald, a report on China’s increasing tendency to look abroad to satisfy its growing appetite.  As the article notes:

CHINESE companies have now acquired farmland roughly equivalent to the size of Melbourne as the country looks abroad to feed its population.

About 8000 square kilometres of farmland around the world are now in Chinese hands, Chinese current affairs magazine Phoenix Weekly reports.

State-owned and private Chinese companies have been active in acquiring land around the world, snapping up everything from palm oil plantations in Indonesia to soybean fields in Argentina, not to mention farmland in Australia.

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The rapid expansion of Chinese investment activities has unnerved politicians from Buenos Aires to Canberra. Central to politicians’ and regulators’ concerns is the alleged footprints of the Chinese government behind the acquisitions.

Helping drive the overseas push is the Chinese government’s concern for food security. One of the government’s proudest achievements is being able to feed its 1.3 billion citizens: it has boasted repeatedly that it is a miracle that Beijing can ”feed 23 per cent of the world’s population with less than 11 per cent of world’s arable land”.

That claim is increasingly being tested by the steady erosion of arable land in China as result of rapid urbanisation and deterioration of the environment. The chief scientist of the Ministry of Environmental Protection, Wang Ben, told a conference in Guangzhou in November that more than 10 per cent of Chinese farmland was polluted with heavy metals.

Chen Guoqiang, a senior research fellow with the Development Research Centre of State Council, which is affiliated with the Chinese cabinet, told a forum in Beijing last year that ”China will become the world’s largest importer of agricultural products within the next five to 10 years”. China is already the world’s largest importer of soybean and cotton.

The shrinking supply of arable land led Agriculture Minister Han Changfu to declare in December that time and conditions were ripe for Chinese agribusiness to seek opportunities abroad.

In a joint communique last year, the Ministry of Finance and the Ministry of Commerce said the government encouraged and supported businesses investing abroad. Individual companies can claim up to 30 million yuan ($A5 million) a year in subsidies from the government.

The government also offers ”soft loans” at below market rates to companies through its policy banks such as the Export-Import Bank of China and China Development Bank.

An economist from the China Investment Corporation, Ma Yo, told the Chinese press that the government could offer up to $15 million in direct support and subsidised loans for a $1 billion investment project.

The investment trend is likely to accelerate as China seeks to diversify its vast foreign reserves holding.

The newly appointed chairman of the Securities Regulatory Commission, Gu Shuqi, said at a recent International Finance Forum in Beijing that up to half of the country’s $3.2 trillion reserve could be channelled into foreign direct investment.

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at and frontier investment markets at