Food Security: China’s Food Supplies in Danger

The Beijing Government is facing a crisis on many fronts. Not only has it been caught out with the Wuhan SARS-Cov-2 (COVID-19) virus, but its efforts to expand influence in the South China Sea (what the Vietnamese call the East Sea) have outraged its neighbors in ASEAN and forged the so-called “Quad” alliance of the USA, India, Japan, and Australia. Domestically the Chinese Communist Party (CCP) has tried to emulate Nazis by herding Uighur prisoners onto trains, a drone video that has shocked even a hardened journalist like Andrew Marr at the BBC. The list of egregious offenses is a long one including bans on Australian beef, the security law in Hong Kong, and long-term attitudes to Taiwan.

As if this was not enough, torrential monsoon rains have caused severe flooding in Central and Southern China. So far, the cost has been around USD 2 to 3 billion with perhaps half a million people displaced. Of course, China has a long experience with floods, the worst being in 1998 that caused USD 48 billion of damage and was the worst in recorded history (except, I suppose, the one that floated Noah’s Ark). Even so, the floods are not over and worse may follow. According to Yale Climate Connections, the rains occur along with a well-known atmospheric feature the “Mei-yu” front associated with the southwest monsoon. The Mei-yu rains affect the southeastern part of China from mid-May to mid-June, migrate northwards to the Yangtze River Basin (YRB) region during June-July, and then move farther northward into northern China during July and August. The YRB has experienced heavier rains during the last few decades.

China is experiencing an expected weather event, and so should be prepared. Perhaps that is one reason it has upped its purchases of staples such as soybeans and rice. Nevertheless, there are other reasons to be worried. 

Compromised water management systems

One is that the water control infrastructure appears to be giving way. We have written about the possibility that the massive (world’s largest) Three Gorges Dam (TGD) might be at risk of collapse. Even if it does not, the dam has reportedly failed to hold back floods [Fan Xiao, Sichuan Provincial Bureau of Geology and Mineral Resources, reported in the Asia Times]. China has a good record of water engineering and dam construction, the SinoHydro company is world-class. The probability of a full collapse is not likely. Nevertheless, it is claimed the Chinese authorities have now admitted that part of the dam has “deformed” (we are unable to verify the original news item in Xinhua as reported by Taiwan News). Pressure on the dam from landslides and siltation in the 600 mile-plus reservoir area has led to large releases of water. But the TGD is part of a hugely complex hydropower, irrigation, and drainage system that dates back thousands of years. And some of it is undoubtedly giving way.

Voice of America reported on 21st July 2020 that “Anhui Province resorted to drastic measures to mitigate the disaster. One dam was blasted open on Sunday to relieve pressure from floodwater behind it, and sluice gates were opened on the Xiangjiaba Dam ….. the intentional release will save the area from even greater damage later….The… Dam has only opened its gates 15 times since it was built in 1953.”. Blowing up a dam is obviously drastic, but allows a planned evacuation, however, a planned release has similar effects, and not solely on fields, crops, and human habitations but on the water management system itself.

Water management systems are complicated and expensive engineering. They include dams and barrages, reservoirs, and an integrated set of primary delivery canals, secondary canals serving a section of the area “under command” and tertiary canals and ditches bringing the water to farmers' fields. In mid and southern China most systems consist of a large reservoir connected to many medium-sized and small reservoirs supplying thousands of village and farm reservoirs which in turn feed canals. 

These complex and delicate systems are likely to be severely damaged or destroyed. Not only will this be a costly and time-consuming reconstruction exercise, but it will limit crop production. Irrigation systems are also linked with roads and storage facilities, so the logistics of supply aggregation (bringing enough produce into one place for merchandising purposes) will be hampered.

Anhui Province is only one of the provinces hit by floods, but it is a good example because the north of the province is part of the North China Plain while the north-central areas are part of the Huai River watershed. Both these regions are very flat and densely populated, easily flooded. This is the center of Chinese agriculture.

China is the world’s largest agricultural producer – from a small land area

The next figure is a trick. Guess which country this is:

Right. China. But as you have never seen it. It is a map of only the main agricultural areas of cropland. By the way, the red areas show urban developments. It becomes clearer below:

China has a massive land area spanning from India to Mongolia, Korea, and the Mekong countries and ASEAN. However, the land that can be cultivated for food production (circled in green below) is only about 12% of the total land area. Most of that is in the East and the center of the country between two of the world’s largest/longest rivers, the Yellow (Huan He) and the Yangtze with much of the land in the South-east given over to urban development and in the West to the desert.

The three regions are the mid- and lower Yangtze River region (Yangtze), the Northeast China Plain (NECP), and the North China Plain (NCP). The Yangtze region, covering seven provinces with >200 thousand square kilometers, has been China’s grain production center since the Ming Dynasty and accounts for over 70% of grain production.

By now the general point has been made. From an agricultural point of view, China is NOT a large country, it is one where a large population – 1.4 billion people – lives and depends on a relatively small area of cultivable land. Much of that land depends on irrigation and drainage systems and is subject to periodic flooding. Furthermore, agricultural land is being permanently lost to urbanization that could threaten its food security even without flood damage. Urbanization in Eastern China led to a loss of 7% from 1995 to 2000. From 2001 China’s total urban area increased from around 31,000 km2 to 81,000 km2 in 2013, an average annual growth rate of 13%. [Kaifang Shi et. al] This urban expansion consumed over 33,000 km2 of agricultural land. Besides, previously good agricultural land has been subjected to heavy pesticide usage and the groundwater has been contaminated with heavy metals from industrial manufacturing.

China’s agriculture has been held up as an example of what can be done. In 60 years since 1949 total grain output increased by fivefold, from 113 million tons 571 MT in 2011, grain production per capita doubled, from 209 to 425 kg during the same period. China has succeeded in maintaining basic self-sufficiency for grain. In a previous article we noted that calorie consumption in China increased from 1,495 to 3,194 Kcal/day/capita (1961 to 2017); not only did grain consumption increase but the diet swung towards a more protein-heavy cuisine that depended on livestock production (particularly pork and chicken, but also beef and dairy). However, with population pressure and a growing appetite for animal products, it has been estimated that China will need about 800  million tons of grain by 2030 [Yuxuan Li].

Takeaways about China’s agriculture

·      China is suffering above normal, though seasonal, rain, and floods.

·      Rural infrastructure in key agricultural production areas of Central China is being damaged or destroyed

·      China has limited cultivable land, most between the Yellow and Yangtze rivers. This is the area that will be compromised if the TGD collapses, but it is also an area already under enormous pressure.

China has successfully increased agricultural production (output) and productivity (yields) but has run into the limits of land being lost to urbanization and environmental degradation (soil and groundwater contamination – 15% of China’s groundwater is “Grade V,” meaning it is so polluted that it is unsuitable for any use); outbreaks of livestock disease (e.g., African Swine Fever) have reduced protein supplies and forced up prices. Even now, domestic supply is responding by producing more “fake food” based on chemicals – when you order wonton soup, please be careful that its ingredients are the real thing.

In these circumstances, the Chinese public’s expectations of increased calorie consumption with animal protein substituting for traditional carbohydrates may be disappointed. Covid-19 has made the situation worse. Logistics have been disrupted, and some countries (Vietnam is one) have limited exports of essential staple foods. The political consequences of these events could be dire even without any major dam collapse. 

China relies heavily on food imports

Whatever the success of China’s agriculture in the past – and it has been considerable - it now has a reliance on imports. China’s import of main or essential food items is as follows:

To summarize the table: China’s 2001 accession to the World Trade Organization lowered barriers to agricultural imports. The country is now a net food importer (the food trade balance is a deficit of about USD 40 billion). The total value of imports is around 117 million tons of essential foodstuffs (mainly in bulk). The value of the main or essential food products in 2018 was just under USD 64 billion and the overall total (all foods is estimated at over USD 100 billion. China is by far the world’s largest importer of soybeans (used mainly for animal feed) and imports significant amounts of other items; the reliance on the Mekong countries for rice and on Australia and New Zealand for meat and dairy must be mentioned. Although the USA does not appear as the main import origin, in aggregate it represents about 25% of all food imports and so the fast deteriorating relationship with the USA is of paramount importance.

Given the current importance of the South China Sea, we need to say something about China’s fishery. Chinese are fish lovers, consuming well over double the world average per head. Aquaculture is one of the largest industries and China is the world’s leading exporter with 10% of the international trade. We have visited massive tilapia farms in the south, and shrimp is a major industry. . China is a low-cost producer and exporter of crustaceans; China effectively makes most shrimp farming elsewhere uneconomic. In 2019, China exported nearly USD 13 billion worth of fish and seafood. The main markets were in Asia (Japan, South Korea) and the USA. 22% (half a million tons) of the world’s supply of mollusks (e.g. scallops) originates in China worth USD 3 billion,

Despite its export position, China also imports fish. In 2019 it imported $15 billion worth of fish making it the world’s second-largest fish importer. Much of that comes from Russia, Ecuador, and India, but a significant amount (nearly one billion dollars in value) comes from Vietnam.  In this case, the dispute over the SCS becomes focused on the fishery. It is estimated that China accounted for 38% of all distant-water fishing (DWF) – in other words, Chinese fishing boats can be found in major fishing grounds worldwide hoovering up the stocks. In the disputed waters nearer to home over-fishing has led to direct physical conflict with fisherfolk in Vietnam and South Korea.

Any military intervention by other powers against China – we might think of the “Quad” group (USA, India, Japan, and Australia) preventing Chinese incursions in the Indo-Pacific – would sensibly target shipping to China, which is the final subject of this article.

Logistics of food supply

The “Maritime Silk Road” describes the ancient (1000 to 600 BCE) sea routes to China. The Tang Dynasty depended on imports of spices and luxury products from India through the Straits of Malacca, commanded by Indonesian and Malay powers; these waters remain critical today. Although not explicitly part of the annual naval exercise code-named “Malabar”  which takes place this year in the Bay of Bengal, there is no doubt that closure of the Straits would cut off about 70% of inbound traffic to China. Any conflict would, of course, cut off the trans-Pacific trade from the Americas and Ocean. 

The chart shows two circle routes from Europe to China (joined from India and South-east Asia). The main route could divert to the deep-water (> 15-meter draft) at Gwadar in Pakistan. This port was built by the Chinese (Singaporean funding to start with) and is operated by a Chinese company. It links to the Chinese-Pakistan Friendship Highway which in the north turns into the Karakoram Highway past Gilgit and then China’s national route 314. Around 1,300 km in length, this gives China direct access from Xinjiang Province to the warm water of the Arabian Gulf. Otherwise, freight moves through the Malacca Straits and then north to the ports on China’s East Coast. 

The other circle route is new. This is the “Polar Silk Route” made possible by climate change that has melted Arctic Ice. Opened in 2017 the ability to transit through Arctic waters may enhance the security environment for Chinese ships. The North-East Passage (NEP) provides an alternative trade lane within Russia’s Exclusive Economic Zone that circumvents the maritime chokepoint at the Strait of Malacca.

Finally, if sea freight was compromised, there are overland options, though moving large bulk volumes might be difficult. The Alashankou Inland Port in Xinjiang links by rail to Almaty in Kazakhstan 880 Km west. Manzhouli Port in Inner Mongolia links through to the main Trans-Siberian spur which heads both west across the Eurasian steppes to Moscow, and east either terminating at Vladivostok or at Beijing via Mongolia. As such, it is an important gateway to Russia. Both inland ports are Category A meaning they are financed by the State Council and have first-rate facilities.

China is NOT food secure – fragile agriculture and vulnerable imports

China’s agriculture is hardly sustainable. Overall, the 2018 Food Sustainability Index (FSI) prepared by the Italian NGO Barilla Center for Food & Nutrition Foundation (BCFN) ranked China 23rd out of 67 countries in overall food sustainability. However, China was close to the bottom of the index at 57th for agricultural sustainability (i.e., domestic supply), shockingly just above Sudan (58th).

We contend that despite considerable success in increasing agricultural productivity on a naturally limited land area, China’s domestic food supply is fragile. The fragility arises from:

·      Urban pressure on cultivable land and a massive, non-rural industrial population that needs cheap and available food.

·      Industrial pollution and the overuse of agrochemicals to increase farm output.

·      Difficulty in controlling disease, especially among livestock (e.g., ASF).

·      A water management system that is complex, in place out of date, and in the case of dams like the TGD over-built; flooding already reduces the available crop area and a collapse of more of the system will further reduce domestic food supply.

China depends, therefore, on imports of essential food items. Much of this supply originates in countries such as the USA and Australia that are contesting China’s expansionism. Maritime trade routes to China are easily cut at locations far from China’s influence; historically, the Malacca Straits have been a chokepoint.

China has tried to counter by opening new routes, e.g., the NEP and the Gwadar Port route through Xinjiang. Overland routes also provide access to grain supplies from Russia and Ukraine and possibly EU foodstuffs if the EU does not fall into line with sanctions. But the volume will be hard to mage and the cost will be more than sea freight.

South-east Asia (Mekong region) is a critical strategic food reserve

The only other agricultural land China can rely on is South-east Asia. The Mekong countries export about 13 million tons of rice annually (Thailand and Vietnam are leaders and together export 20% of their volume to China). These countries also have fruits and vegetables in abundance. Thailand is one of the world’s largest producers of high-quality pigs and poultry and even Laos offers excellent conditions for dairy production. This gives ASEAN some traction. However, the Mekong industrial and tourism economies are in disarray because of the Covid-19 pandemic and China controls the water supply down the Mekong River. China already has enormous investments in the region and will increase them; Thailand has large reverse investments in China.

This analysis puts South-east Asia, and especially the Mekong (“Greater Mekong Sub-region” or GMS) countries with secure land borders with China, front and center in any conflict. Even without war, hot or cold, they are critical to China’s food security.

China imports USD 2008 billion (2 trillion) worth of goods designated under the HS trade system (99 product groups of which 22 are food or related products). This is roughly 10% of world trade. Of the total imported value, the GMS represents about 6% - of ALL products (food and other goods) imported by China. Imports by the GMS from China represent about 1% of their total, so there is a strong balance of trade in the GMS’s favor, i.e., the GMS depends far more on China as a market than the reverse.

For food, China imports over 70% of its external rice requirement from the GMS. About half of that comes from Thailand and Vietnam, approximately one million tons in 2019. 2.5% of live animals (cattle and pigs) come from the GMS, however, the number is understated since many animals are undocumented moving cross-border from Laos and Vietnam. The GMS is the largest foreign supplier of fresh fruits and vegetables to China, 20% of total imports, and 30% of processed fruits/veg. Thailand also supplies 20% of China’s imports of sugar, and Thailand, Laos, and Vietnam supply China with 84% of imports of malt and starch. Vietnam and Thailand provide about 10% of China’s fish imports.

These numbers can all be increased. This growth in production is occurring now as part of China’s overall effort to ensure nearby food supplies but is likely to increase because of Covid-19. The pandemic has damaged the GMS economies in key sectors of tourism and light manufacturing; the Thai economy may decline by as much as 15-20% (official estimates are 5-8%) but the export-oriented food sector remains strong. Both Cambodia and Laos have good conditions for increasing rice and cattle/dairy production. Chinese investment will likely drive both, and the investment is of key strategic importance.  

Geoffrey Quartermaine Bastin

CEO, FoodWorks Group of Companies, Email: [email protected]

All rights reserved. Please use this copy, but we would appreciate being cited. Thank you.

References

‘Yangtze deluge tests limits of the Three Gorges Dam’, Frank Chen, Asia Times, 23rd July 2020

‘China admits Three Gorges Dam deformed by flood’, Keoni Everington, Taiwan News, 23rd July 2020

‘Broken Levees Trap Thousands in China Floods’, VOA, 21st July 2020

‘Urban Expansion and Agricultural Land Loss in China: A Multiscale Perspective’, Kaifang Shi (Key Laboratory of Geographic Information Science, Ministry of Education, East China Normal University, Shanghai) et. al., ‘Sustainability’, 2016.

‘An analysis of China’s grain production: looking back and looking forward’, Yuxuan Li et. al., (Center for Resources, Environment and Food Security, China Agricultural University), Food and Energy Security 2014

China Power Project at the Center for Strategic and International Studies (CSIS), www.chinapower.csis.org

Barilla Center for Food & Nutrition Foundation (BCFN) https://www.barillacfn.com/

‘Food Sustainability Index’ was developed in collaboration between the BCFN Foundation and the Economist Intelligence Unit.

Trade data for 2019 is from UN ITC Trade Map www.trademap.org

Note: this is not an academic or formal report. These are normally properly and fully referenced and footnoted, this article is less formal. We have used multiple sources, for which we are grateful.