According to The Diplomat, changes in domestic food production and agricultural trade policies in China – the world’s largest food producer and importer – could have a significant impact on global trade flows. Today, Chinese policymakers are increasingly focusing on food security, considering it a top national priority.
Boosting domestic agricultural production
To increase domestic agricultural output as part of a broader effort to ensure food security, the Chinese government has introduced a series of policies.
First, China has initiated various efforts to increase domestic grain production and self-sufficiency. Although the principle of self-sufficiency in agricultural production remains the mainstay of China's overall food security strategy, the focus has shifted from achieving self-sufficiency in grain to ensuring basic self-sufficiency in grain (wheat, rice, and corn) and absolute security in food crops (rice and wheat). To support these measures, China has implemented key policies and devoted considerable financial resources to support them.
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| Food security is becoming a top priority for China's leaders. |
Second, China has invested heavily in agricultural research and development to address concerns about agricultural production. In addition to developing drought-, insect-, and salt-tolerant crops, “future food,” automated agricultural systems, and artificial intelligence, Beijing is also interested in seed technology.
In recent years, Chinese policymakers have paid increasing attention to the importance of seeds, a key factor in ensuring food security and agricultural productivity.
In a bid to link biotechnology with measures to improve agricultural productivity, the central government recently announced plans to expand pilot plantings of genetically modified (GM) corn and soybeans to help increase domestic production of these two crops.
Third, Beijing is addressing concerns about soil and water quality. At home, China faces severe pollution amid limited land and water resources and a labor shortage. Although it is home to nearly one-fifth of the world’s population, it accounts for only 7% of the world’s arable land. The actual arable land is also much smaller, given China’s worsening soil and water pollution due to heavy fertilizer use.
China is also struggling to address water concerns. Despite being one of the world’s five countries with the most abundant freshwater resources, China still faces serious problems with water quality and quantity due to uneven distribution.
As part of a broader effort to support measures to increase agricultural productivity and self-reliance, Beijing has launched nationwide campaigns to reduce food waste, secure domestic grain supplies, and reduce food demand. Despite China’s consistently bumper harvests, the country’s leaders have repeatedly highlighted the need to prevent food waste, reduce malnutrition, and benefit retailers and consumers.
Many challenges await
One of the biggest challenges to China’s agricultural production and food security ambitions is climate change. In recent years, climate shocks (floods and droughts) have increased in intensity and frequency, affecting domestic agricultural production, causing crop damage and increasing the incidence of plant pests and diseases.
Over the past 70 years, China's average temperature has risen much faster than the global average. Temperatures are forecast to remain high, making the country more vulnerable to floods, droughts and storms.
Extreme weather events are expected to become more frequent in China, challenging the country’s food security plans and increasing pressure on policymakers. While Beijing is encouraging measures to increase local agricultural production and aims to develop its own agricultural giants, many uncertainties remain.
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| With China's per capita productive land only 43% of the world average, ensuring food security has always been a difficult problem for the government. |
In addition to the above concerns, the shortage of rural labor due to rapid urbanization, aging population and declining birth rate also raises the question: “Who will be the rural labor force in the future?”.
Furthermore, rising disposable incomes have led to changes in food preferences and tastes, reflected in the changing food consumption structure in China, with consumers having greater demand for animal proteins, dairy products, sugar, cooking oils, and more expensive processed foods.
China and global food trade flows
Increased local production impacts regional and global trade flows. This is most evident in feed grains such as soybeans and corn. Since these make up the bulk of China’s agricultural imports, reduced feed grain imports and overall demand, combined with a significant increase in local agricultural production, could help the country reduce its exposure to fluctuations in global food markets, not to mention avoid the blockades that major powers might impose on key trade routes.
This is particularly true of soybeans, with 88% of consumption imported from Brazil, the United States and Argentina. As a key ingredient in animal feed, human food and industrial products globally, soybeans are of great importance in China. Although China ranks fourth in global soybean production at 20 million tonnes, it is still the world’s largest importer, accounting for more than 60% of global soybean trade.
At the same time, Beijing aims to reduce the use of soybeans and corn in animal feed to reduce demand for both food and feed grains. In 2023, China’s Ministry of Agriculture and Rural Affairs announced a three-year plan to reduce the proportion of soybeans in animal feed to below 13% by 2025 in an effort to reduce its reliance on imports. Estimates suggest that by 2030, the proportion could fall to 12%, reducing soybean imports from around 91 million tons (in 2022) to 84 million tons.
Currently, China's soybean production is around 20 million tons while corn production is estimated at 277 million tons. However, in 2022, China will import up to 91.08 million tons of soybeans and 20.62 million tons of corn in the form of feed grains.
While the statistics show a significant gap between China’s current soybean imports and production, the country’s soybean imports have been falling for the past two years, partly due to efforts to boost domestic production and reduce demand for the grain for animal feed, partly due to soaring prices and current supply chain disruptions.
China could further reduce its imports of feed grains, especially soybeans, by setting targets for agricultural production and making a determination to rely on local agricultural production instead of imports.
These policies also impact major agricultural/grain exporters. At the same time, changes in domestic food production and in China’s agricultural trade policies could have significant impacts on global and regional food trade flows.
In addition, in the event of some major extreme weather event affecting its breadbasket and local food production, China could become more dependent on imports and experience reduced agricultural exports.
On the other hand, a reduction in China’s imports of grain (corn or soybeans) or meat would mean millions of tons more food available to other importing countries, and China could even export more of a variety of agricultural products. These two scenarios could impact grain and meat prices, forcing exporters to adjust, creating opportunities for other countries to import surplus agricultural products and affecting global markets.
This situation could also cause farmers in agricultural exporting countries, such as the US - where about half of soybeans are exported to China - to reduce production to avoid falling prices or continue to find new markets for these exports.
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