In this issue: China’s move to sustainable agriculture, Canada and Australia swap barley, canola roles, CWF’s Belt and Road Monitor
China’s move to sustainable agriculture
In early September, the Chinese government released its 14th Five-Year National Agriculture Green Development Plan. At the end of October, the USDA Foreign Service released an English summary of the plan. In short, the plan “identified resource protection, pollution control, restoration of agricultural ecology, and the development of a low-carbon agricultural industrial chains as key goals to be achieved between the years 2021 to 2025.” For domestic agricultural supply chains, the plan includes key targets to “[b]uild a green and low-carbon agricultural industry supply chain to improve agricultural quality, efficiency, and competitiveness.”
In terms of international supply chains, the plan is less clear. However, a new journal article in Nature Sustainability highlights the environmental impacts of China’s agricultural import demands on export countries, including Canada. The report projects that if current trends continue, Chinese demand will mean “225 to 437 million more acres globally needed of agricultural land, resulting in about 88 to 226 million tons of carbon dioxide – the equivalent of 1 year of greenhouse gas emissions” by 2050. The current UN Climate Change Conference (COP26) has also put pressure on global sustainability in agriculture with the European Scientist pushing for a “double down on investment for agricultural research.”
The China Dialogue recently examined how traceability can make both domestic soybean production and imports more sustainable in China. Chinese researchers also announced that they have found a way to convert carbon monoxide (CO) into a feed protein which could help reduce reliance on soybeans for feed. A factory has been opened in Hebi province to convert leftover CO from steel production into the feed. Ridder China has also piloted an autonomous, sustainable greenhouse using AI technology as part of PinDuoDuo’s Smart Agriculture competition in China.
Canada and Australia swap barley, canola roles
Canadian and Australian exporters have seen their roles reversed in China’s canola and barley supply chains. Canada was China’s highest exporter of barley at the end of September, with Argentina second. Australia was China’s chief exporter of barley before China implemented tariffs. However, Australian farmers pivoted to canola and are set to have a record crop with the bulk ear marked for China after drought hit Canadian canola and had China looking elsewhere.
Researchers from the University of Queensland and the Australian National University assessed Australia’s ability to navigate its trade relationship with China despite tensions. The study found that in addition to its ability to pivot to new types of goods to trade with China, Australians were also able to mitigate trade risks by finding alternate ways to get product into China or to find alternate export destinations.
An article in Asia Times notes that Australia is set to discover new trade partnerships as the country and New Zealand have also ratified the Regional Comprehensive Economic Partnership Agreement. This step means the six-member ratification threshold has been met and the world’s largest trading bloc, which includes China, will come into force on January 1, 2022. Canada and the United States are not members.
BSE hits countries, optimism for US and Canada beef
A previous China Brief looked at bovine spongiform encephalopathy (BSE) cases in Brazil, China’s largest beef exporter. The BBC reports that China recently closed its borders to UK beef from cows aged under 30 months after a BSE case was reported at a farm in Somerset. China had reopened its borders to UK beef in 2018 after a similar ban but never imported any beef. China has announced it will begin accepting imports of Italian beef. The notice includes requirements around traceability, BSE, and feed.
The situation is more optimistic for Canadian and U.S. exporters. Steve Dittmer shared optimistic projections from Brett Stuart of Global AgriTrends in a piece for Canadian Cattleman. Stuart predicts that China’s market will be larger than Japan’s by the end of the year as the population continues to grow, beef increases in popularity, post-COVID demand comes on line, and prices remain high. For exporters, beef presents less market risk than pork “as the Chinese beef herd is very small.”
In other news
- The big story in “other news” for Canadians comes from the New York Times – “China’s Hockey Team Is So Bad It Might Be Dropped From the Olympics” says that officials are trying to balance competitive concerns with fears of embarrassing the host nation. Our Trade and Investment Centre director wonders if the greater concern is China having to face our Canadian team in the opening round….
- Reuters reports that China, in response to calls to reduce its manufacturing subsidies, “called for the removal of ‘enormous’ farm subsidies in some developed countries as part of Beijing’s push for reform of the World Trade Organization.”
- The South China Morning Post explores whether the release of the two hostages will allow Canada to align with the U.S. on an Indo-Pacific strategy. Canada recently sent a warship through the Taiwan Strait with the United States, a move China condemned.
- While the two hostages have returned, CTV reports concern remains over the 115 Canadians still detained in China, including four on death row.
- While Canada said it would remove forced labour products from its supply chains, a CBC Marketplace investigation found that tomato products from Nestle, Del Monte and Unilever used tomatoes from Xinjiang companies. The manufacturers sent the tomatoes to a third-party country for processing.
- Vegetables in China are reportedly more expensive than pork as heavy rains hit crops. Reuters reports that “[t]he average wholesale price of vegetables in the capital has jumped by 39.8% since last month, while some leafy vegetables rose more than 50%.”
- Heavy rains in conjunction with supply chain issues and energy searches resulted in a notice from the Chinese government to stockpile for the winter, which has led to some panic buying. CNN reports that such notices are common but that this notice included “rare language about the need for local authorities to encourage families to stockpile ‘daily necessities’” and Chinese consumers have reacted more strongly to this notice than others in the past.
- The Western Producer reports that Chinese feed wheat demand will be down in China as “corn prices in Shandong province […] have converged with wheat prices after a strange year.” Milling wheat demand should continue.
CWF’s Belt and Road Monitor
China’s multibillion dollar Belt and Road Initiative (BRI), the state-backed global infrastructure development strategy, has the potential to enormously shift global trade through new levels of infrastructure and supply chain integration, in the Asia-Pacific region as well as globally. These shifts have the potential to alter global markets for Western Canadian-produced commodities. As part of Canada West Foundation’s efforts to track the Belt and Road Initiative and what it means for Western Canada, the China Brief will now include a section with relevant BRI developments. We welcome feedback as we continue to develop this new feature.
Polar Silk Road sparks concern
With global temperatures thawing out parts of the Arctic, China has made clear it is interested in the Arctic to reduce shipping times up to 30 per cent compared to the use of the Malacca Strait or Suez Canal; the route would be dubbed the “Polar Silk Road.” In August, China launched its first autonomous, underwater vehicle in the Arctic Ocean. However, the world did not know about the launch until Science and Technology news, based in China, released a report in October.
Concerns over Chinese interests were raised at a recent meeting of the Arctic Council. The North American and Arctic Defence and Security Network highlighted its concerns in a recent report, “China’s Arctic Engagement: Following the Polar Silk Road to Greenland and Russia.” Canada is looking to step up its Arctic security measures in response to increased interest in the Arctic from China and other countries. Canada has reached an agreement to allow British soldiers to train on Canadian ice breakers in the Arctic which will allow British soldiers to condition themselves to Arctic temperatures above the surface. Canada hopes to benefit from Britain’s subsurface, nuclear submarine knowledge.
Monitor for Southeast Asian BRI projects
For those looking to track BRI projects and impacts in Southeast Asia, a group of think tanks in the region have built a SE Asia BRI monitor. Institute of Democracy and Economic Affairs (IDEAS) CEO Tricia Yeoh says “we have seen a number of these large infrastructure projects tied to the BRI court controversy due to issues of lack of transparency and public engagement, risks of corruption, and constantly shifting details.” The project aims to “increase[e] information accessibility around regional BRI projects, highlighting areas for improved governance and implementation, and ensuring optimum economic returns.” Access the monitor here.
Funds for Build Back Better World (B3W)
As Biden looks to grow the US-led counter to the BRI, five months after its announcement the strategy still lacks details on where funds will come from and what incentives there will be for investors. One possible source of capital, which Foreign Policy explores in detail, is Australia’s pension funds, which are worth approximately $2.5 trillion. The fund makes up “the world’s fourth-largest pool of savings and is set to reach as much as $10 trillion by 2040.” Jonathan Hillman, a senior fellow at the Center for Strategic and International Studies, also points to the private sector in a recent interview with Marketplace. Hillman says “There’s a lot of money sitting on the sidelines. Something needs to be done, though, to make investing in some of these projects more attractive for investors.” However, more detail is needed on “what kinds of incentives might come together to connect the money in the U.S. and its advanced economy allies with the needs of the developing world.”?
– Stephany Laverty, policy analyst
The China Brief is a compilation of stories and links related to China and its relationship with Canada’s West. The opinions expressed in the links are those of the articles’ authors and don’t necessarily reflect the views of the Canada West Foundation and our affiliates.
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