In the 1990s some people worried that demand from China would overwhelm world food markets. In fact China was a net food exporter for most of the 1990s and 2000s. How did it achieve this?
In the early 1990s people talked mostly about grain. At that time they said that if China achieved more economic development, water resources and land for agriculture would decline, and in the long term grain production would decline. On the other hand, they said that as incomes increased, grain consumption would increase. So they concluded that China’s foodgrain imports would increase significantly.
To answer the question of why it is not happening, there are a couple of important things on the production side. Grain area has declined a little bit since the early 1990s. But more important, productivity has been rising significantly—particularly yields. So production has been growing. On the demand side, as income increases, demand for foodgrain is declining, not increasing. This is because as income increases, demand for vegetables, fruits, and other commodities increases. Since the 1990s, China has not imported a large amount of grain. So it is a supply story and a demand story.
In 2008, China started to import more food than it exported. What caused this shift? Will China continue to be a net importer?
If you look at the data, the major import to China since the 1990s has been soybeans, for two reasons. One, the demand for feed is increasing as meat consumption is increasing. Soybeans are being imported largely to feed animals. Two, demand for edible oil from soybeans and other sources is increasing over time.
Indeed, it’s true that since the early 2000s, China has imported food faster than before 2001. One of the reasons is that China joined the World Trade Organization to open its market. Also, China has grown its economy. As income increases, demand increases, and imports increase.
How will China meet the rising demand for meat, fruits, and vegetables by urban consumers with rising incomes?
For fruits and vegetables, China has a competitive advantage. China exported fruits and vegetables in the past, and I believe it will continue to export them in the future. China also has a competitive advantage in meat production. Most of the increased demand for meat will be produced in China. The major challenge will be the demand for feedgrain. I project that by 2020 China will import probably 20 million tons of maize, due to the increased production of livestock in China.
Why does China have a competitive advantage in these products?
Fruits and vegetables are labor-intensive products. Most of the food is exported to Japan, Korea, Europe, and China–Hong Kong, where labor is much more expensive than in China. Meat production doesn’t use a lot of land; it’s more of a capital investment. When it comes to crops like wheat, maize, sugar, soybean, which are land-intensive products, China doesn’t have a competitive advantage.
China already grows a lot of genetically modified (GM) cotton. Do you think Chinese farmers will adopt GM food crops in greater numbers? Will Chinese consumers buy GM foods?
In the coming years, I believe more GM food crops will be available in China, including GM soybeans and GM maize. I think the commercialization of these two GM commodities will be soon, probably in the next two to four years.
But not GM rice. Rice is quite sensitive. I did an urban consumer survey on this. About 60 percent of consumers would buy GM rice, a little more than 20 percent are against this rice, and the other 20 percent have no clear answer. In general, I would say consumers in China are more accepting of GM food than consumers in EU countries. But in the media there is a big debate on GM rice.
Many countries are slowing the growth of their spending on agricultural R&D, or even cutting spending. In contrast, China’s investments in agricultural R&D have been growing rapidly. Why are China’s leaders putting so much emphasis on agricultural R&D?
China has more than 1.4 billion people. It cannot depend heavily on the world market. Given the size of the country and the resource constraints in terms of water and land, the only way to increase food production in China is to increase yields. R&D is a major tool in helping China boost food productivity. China is also heavily investing in water conservation. From 2011 to 2020, China is investing US$630 billion in improving water conservation.
What do you think China’s role in the world food market will be in the next decade or two?
One of China’s major roles in the world food market is to increase domestic food supplies. The extent to which China is able to increase domestic food production will have an impact on global food prices. So long as China is able to largely achieve self-sufficiency in major commodities, it can reduce pressure on world prices. Second, China can play an important role in transferring agricultural technologies to other developing countries—particularly African countries that can easily adopt these technologies. China has developed many technology demonstration centers in Africa to show how Chinese technology can be adopted locally by those countries.