Monthly Archives: January 2009

Chinese Farmers Seek To Till African, South American Soil

Yesterday’s post on the drought in the wheat lands of the northern plain prompted an e-mail (always welcome, but please also free feel to share as a comment) asking whether anything happened about Beijing’s plans to lease farmland in Africa and South America.

This was a hot topic of conversation a year back before the commodities boom — and everything else, come to that  — went bust. Just as China needed to secure strategic supplies of energy and raw materials by investing at the source in supplier nations, so the same logic was applied to food. Last May, the agriculture ministry proposed making supporting overseas land acquisitions by domestic agricultural companies official government policy, similar to the support given to state-owned banks, manufacturers and oil companies to undertake their foreign direct investment.

China’s demand for commodities has slumped since, but that for food hasn’t. With only 7% of the world’s arable land (and shrinking thanks to urbanization), plus calorie intakes rising, food imports have inevitably been growing. China is only able to pay lip service to its policy of food self-sufficiency, and has been for some years.

Regardless of official policy, Beijing has quietly encouraged Chinese enterprises to invest in agricultural ventures in relatively unexploited regions of Africa and Latin America, and that would at the same time appeal to countries’ development needs.  China is also funding ten new agricultural training centers across Africa to raise the continent’s overall farm productivity. It has discussed with various countries leasing land to be worked by Chinese farmers, much as Chinese labor has been shipped into Chinese funded construction projects overseas.

The largest existing example of that we’ve heard of is more than 6,600 hectares in Brazil farmed by 30 Chinese families, who export the soybeans they grow directly back to China. In Africa, some 350 Chinese are successfully farming 4,000 leased hectares in Uganda. Tanzania, Zimbabwe and Zambia, too, have Chinese-leased farms on a smaller scale.

In 2007, the head of the Export-Import Bank, Li Ruogu, pledged his support for Chinese farmers migrating to Africa. He also told an audience in  Chongqing that more than 12 million farmers from the surrounding area would have to leave their land by 2020. Finding work in Africa, he thought, would be easier than finding a new job at home.

Chinese investment could certainly raise Africa’s agricultural productivity and build much needed farm infrastructure like storage silos and irrigation systms. But there are deep sensitivities that could be hurt. Foreign-run farms and plantations are historically closely connected with colonialism in Africa, one reason that many African nations still restrict land ownership by foreigners.

Given the political sensitivities in likely recipient countries, the agricultural ministry’s proposal last May, as far as we know, remains just that. But certainly no official is likely to stand in the way of any Chinese farmer looking to till foreign soil.

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China’s Wheat Growers Face Drought

Drought is the latest potential natural disaster in the making. The main wheat growing province, Henan, is very dry, having had half its normal rainfall since last September. The provincial meteorological bureau has just  issued its highest-level drought warning, Xinhua says.

The agriculture ministry said earlier this month that one third of the province’s crop was already drought affected. Shangdong and Hebei, the next two largest wheat growing provinces, are similarly drought-struck. The ministry says that a larger area is affected than was the case last year, when China nevertheless harvested its second largest wheat crop ever, at 112.5 million tonnes, a rise of 3% from 2007.

The government has allocated 100 million yuan ($14.6 million U.S. dollars) of emergency aid for  wheat farmers in those three provinces plus Shanxi, Anhui, Shaanxi and Gansu.

China holds large quantities of grain in reserve because of  frequent droughts in the northern plain, so drought is not likely to push up food imports.

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What Did Wen Say At Davos?

Prime Minister Wen Jiabao’s speech to the World Economic Forum’s annual meeting in Davos, Switzerland played to a full house, as would be expected for one of the meeting’s star turns. But what did he say?

Wen made “an unusually upbeat appeal in the context of this year’s rather anxious gathering”, according to the BBC‘s Bridget Kendall.  The New York Times concurred that the Chinese premier had “injected a note of optimism at Davos.” Xinhua reported a call for “confidence, cooperation and responsibility as key to overcoming the current global financial crisis”. Forbes thought confidence-boosting was the speech’s entire purpose. But the FT detected “an unapologetic tone”. The Wall Street Journal heard “a strongly worded indictment of the causes of the crisis, clearly aimed largely at the United States though he didn’t name it”.

Judge for yourself. You can see video of the speech in English or in Chinese, or read it in English (.pdf file) on the WEF site.

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China’s Coal Mines Get Only Slightly Less Deadly

Ninety one thousand coal miners died last year. Shocking though that figure is it is the first time since 1995 that the official death toll has dropped below 100,000, the State Administration of Work Safety says. It is also a 15% drop in deaths over 2007, but the number of serious accidents was up by 37%.

By way of comparison 37 times as many miners die in China for each tonne of coal dug as do in the U.S.

Xinhua reports that 1,054 illegal mines were closed last year in a safety crackdown but that 80% of the country’s mines, producing a third of the country’s coal, remain illegal — and deadly.

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Jimmy Carter Opened Up China

Our man in New York tells us that it was Jimmy Carter, not Richard Nixon, who recognized that there was one China and that China was the PRC. He was watching a TV interview between John Stewart and the former U.S. president, who made the claim. Nixon, Carter said, only said there was one China, without specifying which one that was. It was Carter, Carter said, who supplied the crucial missing detail.

We understand that Stewart is a satirist.

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Happy New Year

Gung Hey Fat Choi. We could certainly do with the second half of that coming true this year.

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U.S.-China Conflict No 2: Gitmo Uighurs

As well as the currency issue there is another early test for U.S.-China relations facing President Barack Obama: where to release the 17 Chinese Uighurs being held in the Guantanamo Bay prison that the new president has ordered to be closed within a year.

Beijing wants them handed over to China to be dealt with under Chinese law. Uighurs make up half the population in predominantly Muslim far western Xinjiang province where Chinese authorities have for years been fighting a low-level war with the separatist East Turkistan Islamic Movement, which is alleged to have ties to al-Qaeda and on the U.S.’s list of terrorist organizations.

The 17 Uighurs were originally cleared for release in 2004. Last October a U.S. judge said they should be set free in the U.S. because of fears for their safety if they were sent back to China. That decision was appealed by the Bush administration, which is why they remain in detention. The group is being held in a reduced security part of the prison separate from other prisoners. They were captured in Afghanistan in 2001 and turned over to Pakistani authorities who in turn turned them over the U.S.

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China Tells New U.S. Administration To Step Lightly

His welcome-to-your-new-job call was cordial and formulaic enough, but in his published remarks, foreign minister Yang Jiechi was more forthright towards his new American counterpart, Hillary Clinton, telling her to be careful with sensitive issues that could strain ties between the two nations.

Yang didn’t mention the yuan issue by name (and that isn’t really in the Secretary of State’s purview), but his words came a day after prospective new Treasury secretary Tim Geithner said his boss believed China was a currency manipulator — an accusation immediately denied by Beijing, where there are fears that Geithner was signaling a change in U.S. policy.

This is shaping up as being the most immediate issue between Washington and Beijing, though Taiwan remains ultimately the most sensitive issue that Clinton and President Barack Obama will have to deal with.

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Geithner Uses The M Word About China’s Currency

Change has come to America in many respects; one is a willingness to say that China is manipulating its exchange rate.

The Bush administration studiously avoided the phrase. Tim Geithner, President Barack Obama’s nomination for U.S. Treasury secretary, said at his confirmation hearings that his boss believes that China is manipulating the yuan.

This is dangerous linguistic territory. Manipulation requires retaliatory action from the U.S. Congress. Geithner, whose comments came in written responses to Senate questions, added, “The question is how and when to broach the subject in order to do more good than harm.” Obama’s team will “forge an integrated strategy on how best to achieve currency realignment in the current economic environment.”

Geithner’s comments triggered a drop in U.S. Treasuries on concern that demand from China, the largest foreign investor in U.S. government debt, may wane. China held about $682 billion of Treasuries as of November, and overtook Japan as the biggest overseas owner of the debt last year.

Geithner is world-savvy and Obama does nothing without thought. Watch this.

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China’s Growth Slows To 6.8% In Fourth Quarter

Not much to say about the latest GDP figures, released today, which were in line with expectations. China’s economy grew by 9% last year, but the annual figure masks a rapid slowdown in the fourth quarter to 6.8%. It is also the slowest growth rate since 2001 and the first time growth has fallen into single digits since 2003.

So much for the numbers, but what of the future?  Xinhua quotes government economist Wang Xiaoguang saying that  the 6.8% fourth quarter growth rate was not a sign of a “hard landing,” just a necessary “adjustment” from previous rapid expansion: “This round of downward adjustment won’t bottom out in just a year or several quarters but might last two or three years, which is a normal situation.”

So expect more stimulus spending, easing of bank loan requirements and interest rate cuts. The was a sharp rise in renminbi bank lending in December (up 18.8 year-on-year, following a 17% rise in November; though the anti-inflation clampdown on bank lending a year back distorts the comparisons), which stirs some hopes that stimulus efforts are beginning to have an effect as the big state-run banks lend for infrastructure development.

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