Strategic Reflections on China's Agriculture Going Global

As early as 1995, China raised the idea of agriculture “going global,” and in 2007 the No. 1 Central Document formally put agriculture “going global” forward as a national strategy. Over the past two decades, China's agriculture “going global” has gone through a development process from a nongovernmental launch to implementation as a national strategy. Over these two decades, China's agriculture “going global” has achieved notable results and also encountered some problems. In summary, the main achievements are as follows: outward direct investment has grown rapidly; investment regions, methods, and industries have become increasingly broad and diverse; and investment returns and experience have accumulated quickly. The main problems are manifested at three levels. First, at the enterprise level, there are problems of insufficient self-capacity, such as shortage of funds, lack of international talent, lack of overseas business management experience, and weak coordinated action among enterprises. Second, at the institutional and policy level, there are obstacles of absent national public services, such as mismatch in domestic financing policies, incomplete supporting policies, deficiencies in trade facilitation measures, incomplete detailed implementation of investment agreements between some countries, and lack of coordination between national target assessment and the operating cycle of enterprise investment. Third, at the host-country level, there are environmental risks and challenges, such as discriminatory policies against Chinese enterprises, inadequate infrastructure supply, unstable social environments, inconvenient labor policies, and restrictive border policies. Deepening the achievements and experience gained from China's agriculture “going global,” and facing up to and resolving the various problems encountered, is the foundation for advancing China's agricultural development toward the global stage in the new era. Since the financial crisis, the world economy has advanced amid turbulence, the international landscape has undergone profound adjustment, China's economic development has entered a new normal, and China's new generation of leaders, with great foresight, have systematically planned China's global development strategy and timely introduced the “Belt and Road” strategy, which will affect the future pattern of world development and China's development prospects. All of this has provided a new strategic context for China's agricultural development to go global. For China's agricultural development to go global in the future, it must assess the situation, plan carefully, set precise positioning, remain committed to the overall picture, and carry out systematic planning.

I. Assessing the Situation and Profoundly Analyzing the Strategic Posture of China's Agricultural Development Going Global

For China's agricultural development to go global, it is necessary to profoundly analyze the strategic development posture and act in accordance with the times, follow the trend, and seize the momentum to advance.

(1) The current stage is a period of major strategic opportunity for China's agricultural development to go global

The judgment that the current stage is a period of major strategic opportunity for China's agricultural development to go global is based on the following three major facts:

First, China's national strength has risen rapidly, and it already possesses the national capacity to plan agricultural development on a global scale. The thirty years of reform and opening up have been thirty years of rapid improvement in our country's comprehensive strength. China has surpassed Japan, Germany, and many other developed countries to become the world's second-largest economy, with an economic growth rate among the world's highest and foreign exchange reserves of about 4 trillion, firmly ranking first in the world. China is the locomotive of world economic development and an important stabilizer that smooths world economic fluctuations. At present, riding the momentum of national strength, it is exactly the right time for our country's agricultural development to go global.

Second, although the four major international grain traders ABCD occupy an important position in the global agricultural product market and temporarily control pricing power for major global agricultural products, undeveloped agricultural resources in the world remain abundant, and at present China's agricultural development going global still has enormous room for development. Africa, Southeast Asia, Latin America, and Russia still have large amounts of cultivated land awaiting development, the agricultural technology levels of many developing countries still need improvement, and the world agricultural industrial chain still has many regional gaps and missing links. At present, by using the potential space of world agricultural development to fill regional gaps and connect missing links in the industrial chain, it is exactly the right time for our country's agricultural development to go global.

Third, Chinese agricultural enterprises are growing rapidly and agricultural technology has matured, creating deep internal strength for our country's agriculture to go global. Multinational enterprises are the main actors in agriculture going global, and advanced agricultural technology is the key to agriculture going global. In recent years, our country's agricultural industrialization and operations have developed rapidly, and a number of export-oriented industrialization leading enterprises with strong competitiveness and strong abilities to develop domestic and international markets have emerged, beginning to show their edge in overseas agricultural investment and multinational agricultural operations, with gratifying performance. In terms of agricultural technology, our country has many technological advantages, such as hybrid rice, pest and disease control, livestock and poultry breeding, water-saving irrigation, and biogas construction, which rank among the world's leading technologies. These have not only provided technological impetus for China's agricultural development since reform and opening up, but have also provided agricultural technical assistance to many Asian, African, and Latin American countries through technology demonstration centers. At present, with export-oriented agricultural industrialization leading enterprises as the mighty force and advanced applicable agricultural technology as the sharp weapon, it is exactly the right time for our country's agricultural development to go global.

(2) The current world development situation is generally favorable for China's agricultural development going global

The judgment that the world development situation is generally favorable for China's agricultural development going global is based on the following comprehensive assessment of challenges and opportunities:

First, although downside risks still exist in world development and prices of major agricultural products are at a low ebb, the trend of economic recovery can be expected and the prospects for agricultural development are promising. Since the financial crisis, economic development in developed countries has slowed, the crisis has continued in some countries, the eurozone has approached deflation, risks from the European sovereign debt crisis have risen, the political situation in West Asia and North Africa has been turbulent, geopolitical risks have not eased, economic development among emerging countries, especially the BRICS countries, has diverged, China's economic development has entered a stage of medium-to-high-speed growth, demand has weakened, and the pace of global economic growth has declined. Affected by the slowdown in the world economy, demand for world commodities has been sluggish, prices have fallen for three consecutive years, and major commodities such as grains and energy are at a low price ebb. However, the global economy is in the post-crisis repair period, global monetary policy is generally accommodative, the pace of deleveraging in various countries has slowed, some countries have introduced packages of economic stimulus measures, developing countries such as China and India are strengthening economic reform, and countries in Asia, Europe, and Africa are actively responding to the “Belt and Road” strategy advocated by China, so world economic recovery can be expected. As residents' incomes in developing countries rise further and urbanization accelerates, demand for agricultural products will further expand, and the future prospects for global agricultural development are promising. Overall assessment indicates that the future world economy and agricultural economy will move toward improvement, and the economic environment and agricultural development environment for our country's agricultural development going global are substantially favorable.

Second, although some international public opinion with ulterior motives has worsened the image of China's agriculture “going global,” allies supporting China's agricultural development going global are increasing day by day and relations are becoming increasingly close. At present, media in some countries internationally make harsh judgments about China's agriculture “going global,” labeling it with tags such as “neocolonialism,” “neo-imperialism,” and “resource plunder theory,” leading individual countries to impose discriminatory restrictions on Chinese enterprises in land purchases and leases. However, through practical actions, our country has gradually dissolved the adverse effects of this negative public opinion. Through real, internationally rules-compliant, and responsible agricultural investment, it has helped the agricultural development of host countries, and the fruits of development have benefited local residents, winning public support and gaining friendship. Under further strategic guidance from the national leadership, our country's agriculture “going global” increasingly highlights the concepts of “amity, sincerity, mutual benefit, and inclusiveness” and “harmony and cooperation,” does not engage in “zero-sum games,” emphasizes common development and mutual benefit, consolidates and develops cooperative relations, and expands the ranks of allies. At present, our country's allies in Asia, Africa, and Latin America are increasing day by day. Some countries regard our country as an all-weather friend, and many countries have formed strategic cooperative relations with our country. At this time of profound adjustment in the international landscape, emerging forces such as China are rising while old capitalist countries are declining. The pattern of interests in international relations faces a reshuffle, and a new security concept centered on equality, mutual benefit, cooperation, and win-win outcomes will replace power politics in the world interest pattern. On the whole, the discordant voices are non-mainstream, the “harmony and cooperation” development concept is the right path, and the international environment for our country's agricultural development going global is generally favorable.

⟦NL> Third, although risks in overseas agricultural operations are prominent, China's ability to manage risks in agriculture going global has steadily improved. Overseas agricultural projects not only have the general characteristics of long construction and production cycles, being greatly affected by factors such as natural conditions, technological adaptability, and fluctuations in agricultural product prices, weak self-development capacity, and relatively large project execution risks, but are also affected by special risks such as changes in the political situation of the investing country, changes in economic policy, and exchange rate fluctuations. Overseas operating performance is very easily impacted by these risks. Nevertheless, the pace of our country's agricultural enterprises going global has not stopped, outward agricultural investment has grown steadily, with an average annual growth rate above 20%, and the strategic tools of these enterprises carrying out overseas investment to cope with various risks have gradually become richer, and their ability to manage risks has improved markedly. In addition, relevant domestic enterprises and ministries and commissions have also provided risk analysis information for China's agriculture going global. Since 2005, China Export & Credit Insurance Corporation has released the Country Risk Analysis Report, assessing and identifying the risk conditions of more than 190 sovereign countries worldwide. Since 2004, the Ministry of Commerce and the Ministry of Foreign Affairs have jointly issued the Catalogue of Industries for Outward Investment by Country. Since 2011, the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Foreign Affairs have jointly issued the Guidelines for Outward Investment by Country and Industry (2011). All of these have clarified risk factors and determined encouraged directions and priorities for China's agricultural development going global. Taken together, our country's agricultural development going global faces many risk factors, but the ability to identify, respond to, and manage risks has also clearly strengthened.