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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is an FT contributing editor and writes the Chartbook newsletter
For China food is more than food. In a media system that is shy about sex and forbidden to debate politics, what so often takes centre stage are images of laden tables, bubbling hotpots and chillies tumbling into fragrant oil. Food is the China dream made real.
Feeding China is not just a matter of symbolism, it is geoeconomics on a grand scale. First and foremost, China feeds itself. The country is home to the largest grain and meat production system in the world. But it is also true that since WTO accession in 2001, it has become increasingly import-dependent. In the early 2020s China was estimated to rely on imports for one-third of its food supply, resulting in an agricultural commodities trade deficit of $124bn last year.
From a strictly economic point of view, reliance on world trade makes sense. Per capita, China has one-fifth of the arable land of the US. Water is scarce. Set against booming exports, food imports are a welcome balancing item. But import dependence also creates risks. Both the EU and the US are self-sufficient when it comes to food. The signs are that Beijing is increasingly uncomfortable with this disparity. The year started with a tariff on beef. The 15th Five-Year Plan further raised the priority of self-sufficiency. If food decoupling is pursued with the same energy as China’s industrial policy, it will upend the global agricultural economy of the last quarter century.
China’s import-dependent abundance contrasts sharply with its own past. Until 2000 the People’s Republic was poor but largely self-sufficient. Older generations of Chinese well remember the hungry years. As recently as 1994, environmentalist Lester Brown was asking anxiously, Who Will feed China?
That question has been answered in spectacular style. China’s grain production has surged. Huge inputs of fertiliser have driven up yield per hectare. Generous pricing has resulted in the accumulation of vast stockpiles. In microeconomic terms this is inefficient. But grain stocks offer a comfort blanket.
What they do not address is China’s dependence on imported protein and animal feed. As Chinese consumers grew more affluent between 1980 and 2020, animal protein consumption rose sixfold. For meat production to be based on imported animal feed was a political choice. It went hand in hand with China’s WTO accession. The chief beneficiaries were the US and Brazil.
Why, you might wonder, does China have anything to worry about? In the global food economy, it is a whale. It has huge buying power. And as its population shrinks, so too will the food imbalance.
But for Xi Jinping food security is a core issue. In the 14th Five-Year Plan of 2021, food was singled out alongside energy and finance as a key pillar of national economic security. In 2022, with the war in Ukraine raging and global supply chains under threat, Xi’s speeches mentioned food security on average once every five days. This year, a revealing analysis by the research group Systemiq suggested that China may be gearing up to deploy the full repertoire of its “industrial playbook” on the question of food security.
This involves a combination of investment and innovation. Beijing is coordinating central and provincial government, state-owned enterprises and financial institutions around smart agriculture. It has licensed the commercialisation of genetically modified maize and soya. Research clusters are forming around neoproteins, fermentation-derived ingredients, feed additives and agricultural biotechnology. State banks are on hand to provide cheap finance. To channel demand, Beijing is tightening food and feed standards and tweaking procurement requirements.
This is the kind of whole-system policy that has given China a commanding lead in the new energy sectors. With all the levers in play, we may, by as early as 2030, see a significant fall in soyabean demand, slashing imports from the US dramatically. By 2040, innovation and efficiency gains could plausibly turn China into a net exporter of poultry, dairy, eggs, fish and seafood. If agriculture follows the industrial policy timeline, by 2050 we should expect to see China emerging as a major source of “cultivated meat”.
For agricultural exporters in the US and Brazil the implications are stark. Where will they find hundreds of millions of new consumers? The obvious places are South Asia and sub-Saharan Africa, two world regions with the largest degree of food shortage. But that depends on economic growth turning human need into effective demand.
Beyond specific scenarios, the key point is simply this: the global division of labour as we know it today is of relatively recent vintage. It was shaped decades ago, largely around western supply chains. In food as in energy, this put China in the position of an importer. That has enabled abundance, but it also means accepting vulnerability, which Beijing won’t. Expect China to respond with a drive towards innovation. With regard to global development there is little to regret in this. The world needs more clean energy and it also needs new food. It is for the incumbents, “us” in other words, that China’s formidable drive for techno-industrial security brings radical uncertainty.