What’s behind China’s interest in African agriculture?Posted on Oct 2, 2014
By Stewart Truelsen
China’s giant e-commerce company, Alibaba, was valued at $231 billion the day of its initial public offering on the New York Stock Exchange. Founder Jack Ma proclaimed that he wants Alibaba to be bigger than Wal-Mart. It is already bigger than Amazon and eBay combined.
It’s not hard to be the biggest in anything, including food and agriculture, when you consider that China has around 1.4 billion people. China is the world’s largest producer of agricultural commodities. It is first in production of wheat and rice and second behind the United States in corn. It is far ahead in pork production.
The United States is the leading exporter of agricultural commodities, and China is the world’s largest importer. Not surprising, it also happens to be our largest market. China is proud of the fact that it feeds 20 percent of the world’s population on just 10 percent of the world’s arable land, but it couldn’t do it without imports, especially now. The worst drought in a half-century is impacting one third of China.
Ever since China entered the World Trade Organization in 2001, U.S. agricultural exports have soared. USDA’s Foreign Agricultural Service projects continued long-term growth. But this relationship should not be taken for granted.
China is also the largest holder of U.S. debt, but it took a small step with Russia earlier in the year to undercut the U.S. dollar and break its domination of the international currency market. China’s largest bank and Russia’s second-largest financial institution agreed to bypass the dollar and settle debts in domestic currencies.
China also may have found a way to eventually break its dependence on imports of U.S. farm commodities. According to a report by the International Center for Trade and Sustainable Development, China has emerged as a major “donor-investor” in Africa which could prove significant in reversing the decline of African agriculture.
The report written by Donald Cassell, an international development specialist with the Sagamore Institute in Indianapolis, concluded that Chinese agricultural initiatives are focused on meeting local and regional needs. “At least for now, Africa is no more than a back-up strategy for China,” said Cassell.
He and others dismiss as “overstated” published reports of Chinese land leases or purchases in Africa. However, he also said that Chinese investments have the potential to change agriculture permanently on the African continent, including development of crops suited to Chinese demands.
Perhaps with an eye on what China is doing in Africa, the White House held the first-ever Africa Leaders Summit attended by more than 40 African heads of state. One of the initiatives announced was a $1 billion financing guarantee for Africa to purchase U.S. farm goods over the next two years.
Africa went from being a net exporter of agricultural goods in the 1960s to a net importer in the 2000s, in part due to widespread degradation of soil and natural vegetation. However, it has the potential to greatly improve farm production, potential that China clearly recognizes and is addressing. Someday Africa could be a major supplier of food to China.
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