SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?


To: RealMuLan who wrote (3636)11/3/2004 5:09:37 PM
From: RealMuLan  Read Replies (1) | Respond to of 6370
 
FOOD FOR THOUGHT

China’s top leadership is starting to worry about the country’s declining food production. Both President Hu Jintao and Prime Minister Wen Jiabao now see a link between food security and social stability. They might as well because, in the years to come, this would be a major concern. Grain production in China has fallen from a record 510 million tonnes in 1998 to a little over 400 million tonnes and is starting to hover around this figure. China’s population is still growing, though at a lower rate due to its stringent population control policies.

City against village
Back in the mid-nineties when the Worldwatch Institute highlighted the potential future gap between China’s grain production and consumer demand, Beijing reacted rather angrily. Its then environmental spokesman, Xie Zhenhua, said tersely “we have been successfully using the world’s seven per cent cultivable land to feed 22 per cent of the world’s population”. He added, “Science and technology and economic growth will see us through”.
Apparently, they are not so sure now. China has only seven per cent of the world’s arable land supporting the world’s largest population mass. In its mad rush for industrialization at all cost, it has allowed further encroachment on its already limited arable land for industrial use and requirements of urban living. The city is gradually eating up the countryside in more than one way.
According to Liu Binyan and Perry Link, China is losing its arable land “at an annual rate of 0.5 per cent to erosion, construction of buildings and roads, and the encroachment of deserts”. Writing in 1998, they pointed out that, “China now has two-thirds of the arable land it had four decades ago, and 2.3 times as many people”. According to a recent estimate, the amount of arable land in China has shrunk by 6.7 million hectares since 1996.
China’s growing industrialisation and consequent urbanisation is proving ruinous for the countryside where the bulk of its people live and work. The depressed rural economy (with artificially low prices for rural produce to support urban industrial economy), with its push for urban migration, is not only causing economic distress but also social disharmony and dislocation. With 10 million rural workers every year joining an already 100 to 150 million floating migrant population looking for work in China’s cities, it is not difficult to imagine the potential for more trouble and social chaos; especially when there are not enough jobs to go around.
According to the UN data, China’s urban population will increase from about 38 per cent in 2002 to 53.6 per cent in 2020 and 70 per cent in 2050. If these future projections are right, China will become a predominantly urban industrial economy. Which raises important questions: First, will there be jobs for rural folks seemingly moving en masse to the cities, as well as for the urban unemployed? Two, how will the authorities deal with all the resultant social pressures, including crime, from such turbulent change? Three, who will feed millions upon millions of new urbanites?

Migration effects
According to the British newspaper Guardian’s China correspondent, “In the first six months of the [current] year, the value of food imports surged 62 per cent to $14.4 billion… Soyabean imports, which doubled last year to 20.3 m tonnes, are expected to double again this year”. Jonathan Watts further reports that: “Such is the demand from China that Thai farmers report entire crops being bought long before harvests. Vietnamese authorities blame food-smuggling [into China] for a record 20 per cent increase in the price of rice. In one novel experiment the Chongqing municipal government is leasing land in Laos to grow food”. Because of the growing demand for grains from China, there is a surge in global food prices. For instance, “grain futures are up 30 per cent this year thanks largely to the China factor”.
What does it mean for both the world and China? The growing demand for food in China, and its inability to meet this demand from within the country, would mean a continuing upward pressure on world prices. This would further impoverish the world’s poor earning $1 or thereabout a day. Besides, it will lead China to use its political and financial clout to lease, occupy or buy out food supplies from other countries, especially from its weak Asian neighbours.
We know that China has territorial demands on its neighbours. Internal pressure on food supplies and other resources could easily propel it to expand outward, as Japan did in the thirties and forties. Therefore, if Communist China maintains its economic growth trajectory in a stable environment under its Communist leadership (a big if, considering the potential for serious social strife in the years ahead), it will seek to secure its Asian neighbourhood under a tight embrace. Taiwan, for instance, is already being targeted. Any success there would have a ripple effect, making China’s neighbours accommodative to its hegemonic ambitions.
Within China, its growing urbanisation will be socially extremely disruptive. In an old civilisation like China, agriculture is not just an economic activity but a whole way of life binding people together in kinship, culture, traditions and in so many other ways. The large-scale migration of rural population to cities will tend to destroy the age-old social structures rooted in the land. And these can’t be transplanted in an impersonal urban environment. The resultant alienation of millions of people from their new urban environment will be a time bomb waiting to explode.
At the same time, employment opportunities will never keep pace with mass migration from the countryside. Large-scale industrialisation is not the answer to China’s massive employment problem, made worse by rural migration. The effective answer to China’s massive unemployment problem, existing as well as potential, is to make agriculture lucrative by reducing economic and social disparities between rural and urban sectors.

Stormy times ahead
And that can only be done by not using the rural sector as a subsidiary of its urban/industrial economy. Otherwise, China is in for serious social strife. In fact, the much-touted claim of social stability under the communist rule will not stand the test of time if Beijing remains obsessed with economic growth to the exclusion of its social aftermath.
China wisely undid its communal farming under Deng Xiaoping, releasing farmers’ immense energy and initiative to boost agricultural production. But since then the rural sector has been treated as a poor cousin to China’s industrial economy, and it has lost momentum.
It is not suggested that China is facing any immediate problem of food shortage. But the long-term prognosis is not good. For a country traumatised by droughts and famine (the famine of early sixties led to deaths variously estimated between 30 and 40 million), any idea of food insecurity can be pretty scary.
The demand for food will keep growing not only because of population pressure, but also because China’s prospering urban middle class is eating more and richer food. For instance, there is now greater demand for meat in the people’s diet. And to grow meat requires much greater use of water, a scarce resource likely to become scarcer in China and elsewhere in much of the world. To quote Liu Binyan and Perry Link, “In the 1950s the water table in Beijing was sixteen feet below the surface; today [in 1998] it is more than 150 feet down”.
Therefore, China’s food situation is potentially perilous. Unless the power-hungry and money-hungry party elite and their hangers-on seriously re-think their country’s industrial growth strategy, China might be in for stormy (not the rain producing kind) times ahead.

thestatesman.net