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China Faces a Rice Bowl Dilemma After Covid

Clara Ferreira Marques

(Bloomberg Opinion) -- Empty supermarket shelves in the early stages of the coronavirus pandemic have put grow-your-own back on the world’s agenda, and nowhere more so than in China, where ensuring food supplies for  its huge population has been a political priority for decades. Simply diversifying imports may not satisfy hawkish voices. Emphasizing domestic production, though, will extract a heavy toll for a country with a fifth of the globe’s people, but roughly a 10th of arable land and less than 6% of water resources. 

For a nation scarred by famine, it’s hard to overstate the importance of food security. That was true long before 1994, when U.S. environmental pioneer Lester Brown drew international attention to the potential consequences of scarcities by asking who would feed China when it boomed. Officials fear inflation as a potential cause of social and political instability — not without reason, given that rising prices helped provoke the Tiananmen Square protests. Agricultural imports, of course, have a tendency to become tangled in diplomatic spats.

The answer was historically a simple one: self-sufficiency, particularly in grains like wheat, rice and corn. The idea has been hard to shake, even if the exact meaning of the phrase has softened over the years. Then came the 2020 pandemic, pressing everyone to fret about messy distribution chains. Officials freshened up plans and, projecting an image of self-reliance, Premier Li Keqiang told China’s parliament last month that it was imperative to ensure food supply, while rewarding grain-producing counties and boosting the minimum purchase price for rice. 

That doesn’t mean the country can simply set the clock back to 1996, when China outlined a strict grain self-sufficiency policy — or that it plans to. In part, what China is doing now is a regular rebalancing of the official position, says Thomas David DuBois at Beijing Normal University, who hosts the China Eats podcast.

For one, a back-to-the-future move would be nigh-impossible. China has become a member of the World Trade Organization. Households eat larger portions and tuck into more protein, increasing demand for grain to feed livestock. Imports of produce have climbed. While China has rice and wheat, it relies on overseas markets like the U.S., Brazil and Argentina for soybeans.  It has also sought to increase meat imports after African swine fever hit pork production last year.  Agricultural purchases have been key to a trade truce with Washington.

Certainly, the cost of past domestic ambitions has already been extortionate. In environmental terms, the damage has meant fertilizers used at four times the global rate, degraded soil and scarce water. Then there’s the financial blow: According to the World Bank, input subsidies rose sevenfold between 2006 and 2010. By that final year, government support for producers amounted to 17% of gross farm receipts. This rising bill, along with other changes, including growing international clout, accounts for Beijing’s more balanced approach after late 2013, when policy began to lean toward imports, sustainability, investing abroad and modernizing at home.

It’s encouraging that some of those efforts have paid off during the pandemic. Farmers seem to have been better able to handle spring planting disruptions thanks to digital applications. Longer-running policies like the vegetable basket plan that makes city mayors responsible for urban food security, partly to stimulate local production and preserve agricultural land, appear to have worked. Reserves held out. Still, the weaknesses of the global supply chain were exposed. 

As ructions with Washington rumble in the background, it’s unsurprising that the idea of the national rice bowl held firmly in Chinese hands, filled with Chinese rice, holds some attraction. Yet there are longer-term risks for misallocated resources that already lead to plentiful smuggling of cheaper fare. Not to mention what Amrita Jash at New Delhi’s Centre for Land Warfare Studies points out are heightened risks of clashes with neighbors like India, as China seeds clouds in Tibet, or further afield from an expanding fleet of distant-water fishing vessels

It matters, though, that popular concern over issues including genetically modified crops, metal-tainted soil and dirty water — plus official awareness of the cost of ignoring them — means that a new domestic push has a chance of being far less destructive than before. Food safety worries have only heightened of late. Physical constraints like water scarcity will play a role in limiting those aspirations, as Bloomberg Intelligence notes, and shape more sustainable policy by encouraging investment in irrigation and other innovations.

China has little choice but to build food security by balancing internal sufficiency against more diverse international sources, often with Chinese links in the supply chain. That doesn’t necessarily mean large-scale acquisition of land in Africa and elsewhere to ship harvests back home, which is both unpopular and economically punitive. Using its clout on global markets makes more sense.

 In this context, the Belt and Road Initiative has been a game-changer in terms of linking up the mainland and friendly sellers when it comes to grains, says Zhang Hongzhou of Nanyang Technological University, who studies China’s resource governance. Ukraine is now a leading supplier of corn to China. 

China’s rice bowl is going to stay mixed a while longer — however tightly it is held.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.

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