Interpreting New Trends in China's Agricultural Trade
After joining the WTO, China became the country with the most open and fastest-growing agricultural products market in the world, so today's food and food security issues are particularly important.
In 2015, the national food security strategy underwent a moderate adjustment, establishing the principle of moderate imports, but this must be premised on two guarantees -- ensuring basic self-sufficiency in grains and ensuring absolute security of staple foods. Under these two guarantees, everything else can be discussed, but that does not mean discussion without conditions.
The food security strategy adjustment stems from new development
Over the past 15 years, China has imported large quantities of grain, mainly soybeans, and China's agricultural trade deficit has reached nearly 40 billion US dollars, which represents a major market opportunity for the world. Although national grain production simultaneously achieved eleven consecutive years of growth, and the share of value added from the primary industry has reached 20.7%, the most important opportunity now is not a production opportunity but a market opportunity.
Although global warming presents more challenges than opportunities for the world, current and future grain supplies at home and abroad are generally adequate for a period of time.
68%-70% of China's cultivated land is inland. Global warming brings increased pests and diseases and more extreme weather, but it also has benefits, such as increased rainfall. This is very notable in Northeast and Northwest China, where rainfall has increased substantially in recent years. The reasons are, first, contributions from science and technology, and second, the favorable side of climate change. So we must look at problems dialectically.
Another notable feature of agricultural production is the large-scale application of science and technology and the improvement of agricultural production conditions in developing countries. For example, improved production conditions in Southeast Asia and higher rice production efficiency. In addition, thanks to the joint efforts of international organizations and the Chinese government in carrying out "South-South cooperation," Africa's actual production capacity has greatly increased. Relevant institutions predict that it may increase further in the future.
When global grain supplies are adequate, China's grain gap will also run above the warning line for a long time. Apart from corn, China's self-sufficiency rates for the other two major grains are also relatively high. From 1957 to 2014, the world food price index generally declined. This is the result of scientific and technological progress and management innovation by all humanity, the result of international organizations helping developing countries, and also the result of collaboration between China and other major developing countries -- such as India and Brazil.
The ability to cope with risks is most important
During China's "13th Five-Year Plan" period, agricultural modernization will continue to be strengthened. The Fifth Plenary Session of the 18th CPC Central Committee proposed to "vigorously advance the pace of agricultural modernization," which will further consolidate the foundation of agricultural trade. Raising the level of modernization naturally includes raising agricultural production capacity and the ability to cope with risks. For a country as large as China, agriculture cannot be without risks, so the ability to cope with risks is most important.
One challenge is finding a good trade balance point. China's agricultural development has entered a new normal, with challenges and opportunities coexisting. Price differences already exist, and the pressure of excessive imports always exists. Businesses doing trade will certainly choose products of good quality and low price. But as a government, especially the central government, it must take into account the interests involved in trade, the interests of consumers, and the interests of farmers. It must find a balance point among them, although this balance point is not easy to find.
The second challenge is weak growth in agricultural exports. China's vegetables and fruits once had advantages in world exports, but in 2015 the fruit trade showed a deficit, and the surplus advantage in vegetable trade is also declining. China may appear to have a large population, but the Lewis turning point has now appeared. The Fifth Plenary Session of the 18th CPC Central Committee relaxed family planning. The so-called national policy of family planning has not changed, but the speed and intensity of relaxation have increased somewhat. This is because China faces enormous pressure from significantly rising production costs, especially a sharp rise in labor costs.
Another issue is that China's agricultural production is becoming increasingly difficult. When joining the WTO, the requirements for agriculture were relatively harsh, especially as the developed economies of the EU and the United States made very high demands on us, which had a strong restraining effect on us. Now, even if we had money, we could not adjust, let alone when we do not have money. Therefore, the limitations of policy have already become apparent.
New opportunities
Facing many challenges, I remain optimistic. China needs to continue advancing opening-up. For a country as large as China, agriculture now cannot be conducted behind closed doors as in the past; it must cooperate and open up with agriculturally developed countries in the world such as the United States, Australia, and Brazil. Therefore, opening up is unavoidable. China must also transform its development model and attach importance to the internal driving force for structural adjustment. External pressure for structural adjustment is increasing, and the internal driving force is also increasing. The whole society, from top to bottom, is aware that agriculture must transform its development model. In addition, as environmental pressure becomes increasingly severe, development that pays a high price is unsustainable, and agriculture should rely even more on internal driving forces for development. The Chinese government's execution capacity is still very strong, and I believe that within a few years, the results of transforming the agricultural development model and adjusting the structure will be fully demonstrated.
At the same time, we hope China will have large domestic seed companies. With such a large market, China will certainly produce large seed companies that people look forward to.
In addition, China's agricultural going global will accelerate. Whether it is the central government, enterprises, or society, integration with international production capacity will increase. In 2014, China achieved for the first time a basic balance between attracting foreign investment and outward investment. As time goes on, China's capital export and technology export are unavoidable.
In response to the above opportunities and challenges, we must implement the following three measures: first, achieve green development and sustainable development; second, achieve shared development and improve the competitiveness of agriculture; third, continue opening up and improve the quality of opening up. China cannot forever be a place for processing imported materials; it must be a research and development center for technology- and capital-intensive products.
According to the requirements of the Fifth Plenary Session of the 18th CPC Central Committee, China must promote innovative development. This is not only technological innovation, but also institutional innovation, market innovation, and business format innovation. "Double Eleven" is a festival created by China. It is not only very popular in China; this Chinese-style "Singles' Day" is also very popular in Vietnam, Africa, and Latin America. With business format innovation, coordination, sharing, and opening up, the world will become a true global village. By 2050, the world's additional 2 billion people will certainly not mainly come from China, but China has the obligation and responsibility to work with the international community to safeguard food and food security and to safeguard farmers' food security and income growth.