China Faces a Rice Bowl Dilemma After Covid
(Bloomberg Opinion) - Empty supermarket shelves in the early stages of the coronavirus pandemic have put their own growth back on the world's agenda, and nowhere more than in China, where securing food supplies for the general public has been a political priority for decades. A simple diversification of imports cannot satisfy Hawkish voices. However, the emphasis on domestic production will take a heavy toll on a country with a fifth of the world's population, but about a tenth of the arable land and less than 6% of the water resources.
It is difficult for a nation suffering from famine to overestimate the importance of food security. This was the case long before 1994, when US environmental pioneer Lester Brown drew international attention to the possible consequences of scarcity by asking who would feed China when it was booming. Officials fear inflation as a possible cause of social and political instability - not without reason as rising prices provoked Tiananmen Square protests. Agricultural imports, of course, tend to get caught in diplomatic spats.
Historically, the answer has been simple: self-sufficiency, especially for cereals such as wheat, rice and corn. The idea was difficult to shake, even if the exact meaning of the expression has waned over the years. Then came the pandemic 2020, which urged everyone to get annoyed about messy distribution chains. Officials refreshed their plans, and Prime Minister Li Keqiang told the Chinese parliament last month that it was imperative to ensure food supplies, reward grain-producing districts, and increase the minimum purchase price for rice.
That doesn't mean the country can simply reset the clock to 1996 when China was - or is planning to - adopt a strict grain self-sufficiency policy. In part, what China is doing now is a regular realignment of its official position, says Thomas David DuBois of Beijing Normal University, who hosts the China Eats podcast.
For one thing, a step back into the future would be almost impossible. China has become a member of the World Trade Organization. Households eat larger portions and take in more protein, which increases the demand for grain to feed cattle. The imports of products have increased. While China has rice and wheat, soybeans rely on overseas markets like the United States, Brazil, and Argentina. Attempts have also been made to increase meat imports after swine fever has affected pork production last year. Agricultural purchases were the key to an armistice with Washington.
Certainly, the cost of past domestic ambitions was already extortionate. In environmental terms, the damage has resulted in fertilizers being used at four times the global rate, soil deterioration and water scarcity. Then there's the financial blow: According to the World Bank, input subsidies increased sevenfold between 2006 and 2010. Last year, government support to producers was 17% of gross farm income. This rising bill and other changes, including growing international clout, explain Beijing's more balanced approach after the end of 2013, when politics focused on imports, sustainability, overseas investment, and domestic modernization.
It is encouraging that some of these efforts paid off during the pandemic. Farmers appear to have been better able to cope with springtime planting disorders thanks to digital applications. Longer-term measures such as the vegetable basket plan, which blames the city's mayors for urban food security, partly to boost local production and preserve agricultural land, seem to have worked. Reserves held. However, the weaknesses in the global supply chain were uncovered.
Given the unrest with Washington in the background, it is not surprising that the idea of the national rice bowl, firmly held in Chinese hands and filled with Chinese rice, has a certain appeal. However, there are longer-term risks for misallocated resources, which already lead to an abundance of smuggling of cheaper tariffs. Not to mention what Amrita Jash emphasizes at the Center for Land War Research in New Delhi is the increased risk of clashes with neighbors like India as China sows clouds in Tibet or further away from a growing fleet of distant water fishing vessels
However, it is important that public concern about issues such as genetically modified crops, contaminated soil and dirty water, and official awareness of the cost of ignoring them, means that a new domestic initiative has the chance to be far less destructive than before . Concerns about food safety have only increased recently. Bloomberg Intelligence notes that physical constraints, such as water scarcity, will play a role in limiting these efforts and will make policies more sustainable by encouraging investment in irrigation and other innovations.
China has no choice but to improve food security by balancing internal sufficiency against more diverse international sources, often with Chinese links in the supply chain. This does not necessarily mean the large-scale purchase of land in Africa and elsewhere to transport crops home, which is both unpopular and economically punishable. It makes more sense to use your clout in global markets.
In this context, the Belt and Road Initiative has fundamentally changed the connection between the mainland and friendly grain sellers, says Zhang Hongzhou of Nanyang Technological University, which examines China's resource governance. Ukraine is a leading supplier of corn to China today.
China's rice bowl will remain mixed for a while - however firmly it is held.
This column does not necessarily reflect the opinion of the editors or Bloomberg LP and its owners.
Clara Ferreira Marques is a Bloomberg Opinion columnist who deals with raw material, environmental, social and governance issues. Previously, she was an associate editor at Reuters Breakingviews and an editor and correspondent at Reuters in Singapore, India, the UK, Italy and Russia.
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