China: The Politics of Biotechnology
Oct 20, 2003
stratfor.biz
Summary
Agricultural biotechnology policies in China apparently have taken a restrictive turn recently, with the imposition of labeling laws for, and tighter restrictions on the import of, products made with genetically modified ingredients. But looks can be deceiving. Concerns about bioengineered foods and crops are more than a question of health and environmental safety: In fact, they play a key role in China's domestic security policy and, as such, will play into Beijing's foreign policies as well.
Analysis
China has recently begun enforcing new labeling laws for food products made with genetically modified ingredients. Beijing also is imposing new regulations on the import of bioengineered crops, citing concerns about health and safety.
But at the same time, Chinese government spending on biotechnology continues to rise, belying the apparent downshift in acceptance of engineered crops. Rather, Beijing views biotechnology -- particularly in the field of agriculture -- as a core element of domestic food security, as well as a tool to deal with new difficulties imposed on Chinese farmers amid the ongoing economic changes within the country.
For the central leadership in Beijing, biotechnology is the future of China, and protecting that heritage from outside exploitation is becoming a top priority for government agencies. Regulations on the import and distribution of engineered foods and other agricultural goods are, to a great degree, a product of China's attempts at maintaining domestic stability -- and given the public nature of China's agricultural biotechnology research and development, Beijing will walk a fine line in dealing with the conflicting policies of Europe and the United States.
China is the leading nation in plant biotechnology research outside of North America. It far surpasses other large developing nations such as India and Brazil, accounting for half of the developing world's expenditures on plant biotechnology. Investment in biotechnology research in China grew from just $10.5 million in 1995 to $38.9 million five years later. Total state investment in agricultural biotechnology research and development is expected to reach nearly $1.5 billion during the tenth five-year plan, which stretches from 2001 to 2005 -- four times as much as was spent in the preceding 15 years. This ambitious goal means Chinese public spending will account for more than a quarter of the total public expenditure on agricultural biotechnology in the world.
Other research puts China's total agricultural biotech spending at closer to $100 million, when all factors are considered -- with plans to raise it to nearly $500 million by 2005. Globally, around $3 billion a year is spent on research and development in this field, of which one-third is from the public sector. The United States currently spends nearly half a billion dollars of public money in such endeavors each year.
Though the total Chinese expenditures might not match the amount being spent in the United States, particularly when the private sector contributions are taken into account, it is important to note that more than 90 percent of all funds spent on agricultural biotech research and development in China are public funds. The government is the key facilitator and driver of biotechnology research and thus can direct research toward the products deemed most strategically important.
For Beijing, the most important aspect of agricultural biotechnology research is to ensure China's food security. By some estimates, China must feed close to 20 percent of the world's population with just 7 percent of the Earth's arable land. Much of the country's food is produced by small farmers rather than on large industrial farms, further limiting the efficient use of space. In addition, natural disasters -- ranging from floods to droughts to swarms of locusts -- regularly ravage their crops.
China's entry into the World Trade Organization is generating further pressure by opening the country's agricultural sector to competition from lower-cost imports -- exacerbating the already difficult problem of dealing with a massive surplus of rural labor. Chinese farmers are losing jobs and moving into the cities, bringing additional strains to the urban areas, where unemployment is also on the rise. This in turn sets up a potentially destabilizing social situation -- which the government in Beijing is desperate to avoid.
Chinese agricultural biotechnology research, then, has focused on government priorities to increase domestic yields at lower costs to farmers. Genetically engineered, pest-resistant cotton, for example, comprises nearly half of all cotton grown in China, and the savings in pesticide and fertilizer applications have cut costs by 28 percent and raised the average small farmer's annual income by $150, according to a recent study by researchers from the University of California at Davis and the Chinese Academy of Sciences.
Plant engineering efforts are focusing not only on cotton but also on food staples such as rice, wheat and maize, which each make up approximately 20 percent of planted land. And though transgenic rice varieties have yet to be approved for commercial growing, engineered "super-rice," with increased yields, is already in the markets.
With these crops, the main technological focus is on making them disease-, insect- and drought-resistant -- better adapting the crops to China's growing conditions and potentially expanding the amount of arable land.
At the moment, these efforts are geared primarily for domestic use. Though exporting engineered foods is not currently a priority, the potential for that is growing, and a black market has already sprung up in Asia for Chinese-engineered cottonseeds. But in the Asian race to develop biotechnology -- not only for crops but also medications -- China is looking to turn its already advanced stage of research and development to its advantage. Beijing is signing biotechnology cooperation agreements with several nations in Asia and beyond. And through this cooperation, Beijing hopes to expand its influence in the region, offering assistance as a benevolent Middle Kingdom and serving as an alternative to the "exploitative" Western powers and their business interests.
China has been expanding its foreign policy in the region in recent years, positioning itself as an economic alternative to Western powers that impose their political will on smaller nations. But the country also continues to reach out to Europe and the United States, seeking investment and acceptance in the international community. For example, Beijing played a key role in the passage of the U.N. Security Council resolution against Iraq in 2002.
More recently, it also has played an instrumental role in bringing North Korea and the United States to the bargaining table to end the nuclear standoff. Moreover, Beijing is participating in Central Asian counterterrorism exercises and recently has floated the idea of joint oil and gas exploration in the South China Sea -- an area full of conflicting territorial claims.
However, Beijing's top concern remains domestic stability and the security of the national leadership. China's massive unemployment problems weigh heavily on policymakers in Beijing. Dealing with migrant labor, in particular, has vexed leaders as they struggle not only to affect a solution, but also to determine the true level of unemployment in the rural regions.
Biotechnology is one solution to this problem, because it makes remaining a farmer more profitable. This, coupled with attempts to rein in corruption and graft by implementing more controls over the local and regional bureaucracy, is helping Beijing keep the farmers in the fields and reducing complaints from rural workers. In addition, the central government has passed new regulations to protect the rights of migrant workers -- regulations that not only provide social services for these laborers, but also make it easier to track the moving population and better grasp the size and scope of the problem.
Interestingly, Chinese consumers and farmers are embracing biotechnology. Since the Communist Revolution, the Chinese have been told to embrace science and put away superstition, something that has better prepared the nation's people to accept genetically modified foods and other products. In one 1999 study by Environics International, 79 percent of Chinese held a favorable view of agricultural biotechnology to create pest-resistant crops -- a percentage even higher than the 78 percent registered in the United States, and significantly more than the 63 percent of Japanese and 36 percent of British holding similar views.
This acceptance has remained, and a recent survey of Beijing residents found that a large majority of shoppers were quite willing to buy engineered foods, with many even willing to pay a premium for such products if there were noticeable benefits to be gained from the engineering. Such attitudes facilitate the government's plans for expanded use of biotech crops. But some resistance -- led by environmental groups emboldened by China's more open economic and social climate -- has emerged.
To address these domestic and similar international issues, Beijing has enacted labeling laws for products containing genetically modified ingredients and tightened import regulations on biotech crops. But there also are deeper reasons for these new regulations. Part of the reason for the significant government interest in biotechnology research is a realization that future food crops will become increasingly reliant on such technologies, and China does not want to become dependent upon foreign suppliers for seeds and agricultural products. On the contrary, a key reason for the biotech focus in China is to ensure domestic food supplies.
For Beijing, agricultural biotechnology is no less vital than other strategic sectors, such as energy and telecommunications. And like its policies in those areas, Beijing's agricultural biotech policies have adapted a two-pronged approach to foreign participation. On one hand, China wants to attract foreign technology and investment dollars to accelerate its domestic programs; on the other hand, it wants to ensure full government control over development and the final products, and to keep out direct competition for as long as possible.
This dichotomy leaves China at times looking somewhat confused to outside observers -- as in the current case with biotechnology, where it appears to be rethinking the safety of biotech products but in reality continues to expand domestic research and development programs. And to aid its efforts to avoid drawing too much criticism from Washington, for example, China can play the United States off against Europe, using the strongly conflicting biotech policies of each to better position itself.
Ultimately, China's development and use of biotech foods and other products will continue to increase. The central government will focus on the best ways to integrate biotechnology with other initiatives -- from addressing unemployment and migrant labor to increasing ties with neighboring states and strengthening domestic food supplies -- thus ensuring a more independent and stronger nation.
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