Global Policy Forum

China Looks Abroad to Satisfy Growing Appetite

Steady erosion of arable land due to rapid industrialization has prompted China to acquire land abroad to grow crops. About 8000 sq. kilometers of farmland worldwide have been snapped up by Chinese companies. But China is not the only nation looking to secure its food security by investing in foreign land. The US, the UK, Australia, India, and Saudi Arabia are all part of this larger trend.

By Peter Cai

Sydney Morning Herald

January 17, 2012

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.

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.


FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.