One of the world’s biggest e-commerce companies, will soon be able to deliver fruit from anywhere in the world to the doorsteps of Chinese consumers within 48 hours.
It takes highly integrated global infrastructure connecting farms to warehouses to transportation to consumers to achieve a goal like this. China’s new mega-infrastructure plan, the Belt and Road Initiative (BRI), will help make company’s vision a reality.
It will also increase the concentration of global food production and distribution, potentially pushing small-scale farmers, fisherfolk, forest peoples and rural communities further to the margins. There are also serious concerns that BRI could worsen land grabs, human rights abuses, indebtedness, and environmental and health impacts in target countries.
Also known as One Belt One Road (OBOR), BRI was launched by Chinese President Xi Jinping in 2013. The largest infrastructure project ever embarked upon in world history, BRI focuses on promoting manufacturing, trade and investment, as well as the physical and digital integration of international markets.
BRI provides a framework for Chinese investment to enhance existing infrastructure as well as build new production sites and trade routes to better connect China with the rest of the world.
BRI envisions a land-based “belt” connecting China with Europe and a sea-based “road” crossing the Indian Ocean to Africa up through the Mediterranean and reaching over the Pacific as far as Oceania and Latin America (see map).
The initiative currently involves some 90 countries and is expected to cost more than US$1 trillion. Much of the funding comes from Chinese sources such as the China Development Bank and involves a combination of loans, bonds and equity investments. China also set up a special Silk Road Fund to finance BRI projects.
International finance institutions such as the World Bank and the Asia Infrastructure Investment Bank, as well as private banks like HSBC, have also expressed support or established their own BRI focused funds.
Because of its vast geographic scale and massive investment, BRI could reconfigure large parts of Asia, Africa, Europe, and the seas in between, into production and distribution areas with warehouses, logistics terminals and export-import zones.
BRI-associated projects have already undermined thousands of people and hundreds of millions more are likely to be adversely affected to make way for BRI’s planned roads, railways, seaports, dry ports and airports.
Many of BRI’s projects are promoted as win-win ventures that will bring much needed jobs, capital and technology to local economies. In reality, they are likely to further concentrate power in the global food system and undermine national food security, local food producers and rural communities.
How BRI Impacts Agriculture
Food security has always been a major concern for the Chinese government. Until recently, this meant trying to achieve and maintain national self-sufficiency, with the task falling almost entirely to China’s small-scale farmers. Now the government is shifting its approach, replacing peasant farms with large commercial agribusiness operations, investing in farm production abroad and opening up to more imports.
China’s foreign agricultural investment is increasingly led by the private sector. Over the past ten years, Chinese companies have invested US$43 billion in agricultural production outside China. They have also gone on massive shopping sprees, buying up operations in global production chains like pork in the US and soybeans in Brazil, and gaining greater control over the global seed industry by taking on majority ownership of the Swiss-based seed giant Syngenta.
China is also a huge importer of soybeans, dairy, oil seeds, sugar and cereals. Its meat and dairy imports are surging, propelled in part by trade agreements with Australia and New Zealand. Given its reliance on the US for about 20% of its food imports, the new “trade war” launched by President Donald Trump against China has put pressure on Beijing to find new sources of food and livestock feed.
BRI is expected to boost China’s outward investments in agribusiness as well as baseline infrastructure spending to facilitate greater agricultural trade. The annex table of agricultural projects under BRI gives a sense of what is unfolding in various countries.
CPEC in Pakistan
Total agricultural trade between China and Pakistan reached US$652 million in 2013. The China-Pakistan Economic Corridor (CPEC), signed in April 2015 and worth US$46 billion, aims to increase this. The project’s goal is to connect southwest China to the port of Gwadar in Balochistan province through roads, railways and other infrastructure. Along the way it will open up new mines, mills and communication systems not to mention military capabilities. Agriculture is central to the agenda.
The long-term plan is to replace traditional Pakistani farming with high-tech farming and marketing systems and a large-scale agro industrial complex. Towards this end, CPEC outlines ten key areas for collaboration and nine special economic zones. Projects include the construction of a fertiliser plant with an annual output of 800,000 tons; large-scale vegetable and grain processing plants in Asadabad, Islamabad, Lahore and Gwadar; and a meat processing plant in Sukkur. Hundreds of thousands of hectares of farmland will be needed for these projects, with many farmers likely displaced.
CPEC is also facilitating the expansion of hybrid wheat, replacing farmers’ traditional wheat varieties to the benefit of Chinese agricultural input companies like Sinochem Group. The company has successfully grown Chinese hybrid wheat on a pilot area of 2,000 hectares in Pakistan and now plans to introduce it to other BRI countries like Uzbekistan and Bangladesh.
With wheat being one of Pakistan’s main staples, local communities fear these developments will negatively impact small farmers and lead to Chinese control over the country’s food supply, according to Roots for Equity. CPEC is also bringing Chinese investment to the Pakistani dairy and seafood sectors for export to China, with cotton and rice also on the radar.
BRI in Africa
East Africa is the first link in BRI’s connection to Africa. China is building ports and sea infrastructure to upgrade the route from South Asia to Kenya and Tanzania and then up to the Mediterranean via Djibouti. Inland railways are also being built. East African food and farming are bound to be undermined.
For instance, China pledged to combine BRI with the longstanding Forum on China-Africa Cooperation to boost African agricultural productivity and increase its agricultural imports from Africa. China already has agro-industrial parks in Mozambique, Uganda, Zambia and other countries, and is now expanding its agro-industrial investments under the banner of the BRI.
As for West Africa, President Xi Jinping visited the region for the first time in July 2018 with the intention of connecting the region to BRI.
The Diamniadio International Industrial Platform, a new Chinese-funded special economic zone outside of Dakar, has established Senegal as a springboard for Chinese industry throughout West Africa. Since Senegal is a member of the African Growth and Opportunity Act, China can manufacture and export goods from the special economic zone to the US market using Senegal’s quota and duty-free privileges.
The same holds for the EU market, where Senegalese goods can enter through the Everything But Arms trade arrangement.
Kazakhstan: Ground Zero in Central Asia
Kazakhstan has been described as “ground zero” for China’s agricultural ambitions in Central Asia. A massive dry port, 49% owned by Chinese companies, has been built in the town of Korgos on the border between China and Kazakhstan to facilitate food trade. A railroad and a highway are being constructed across the country to connect China with Europe.
And a trade corridor has been constructed which links Kazakhstan to Southeast Asia through the Chinese port of Lianyungang in Jiangsu province. BRI’s Silk Road fund alone has earmarked US$2 billion for Kazakhstan, much of it connected to agriculture.
Chinese interests are eyeing Kazakhstan as a new source of wheat, sugar, meat and vegetable oil. Authorities and foreign investors in Kazakhstan view China as a lucrative market for farm exports, especially beef, wheat and dairy. Kazakhstan is already on its way to tripling wheat exports to China by 2020. The country has also just broken into China’s soybean market and is building a new meat processing plant near the Chinese border focused on producing beef and lamb for the Chinese market.
In May 2016, the government of Kazakhstan announced that Chinese companies were proposing 19 new agroindustrial projects valued at US$1.9 billion under the banner of BRI. One year later, seven agreements worth US$160 million were signed at the Kazakh-Chinese Agriculture Investment Forum in Astana. With the exception of large-scale poultry and cattle farms, the projects focus more on processing than on primary production.
COFCO, China’s biggest food trader, is one of the Chinese players moving into Kazakhstan. COFCO has partnered with a Kazakhstani company to produce tomato paste for China and is starting to import beef from Kazakhstan through a freight train service opened in 2017. Another Chinese company, CITIC Construction, is investing in livestock production to generate beef for export to China. Meanwhile, Aiju Grain and Oil has started producing and exporting vegetable oil using farms that Aiju “either owns or invests in” in Kazakhstan. The list goes on, with Chinese companies partnering with Kazakhstani firms to venture into fruit and vegetable production, sugar processing, meat packing, oil processing, and flour and noodle manufacturing.
In 2016, protests erupted throughout Kazakhstan after the government announced it had revised a 2003 land law to extend the farmland lease period for foreigners from 10 to 25 years. As a result of the protests, the government postponed implementation of this measure until December 2021. Still, protests related to large-scale Chinese investments continue to rage, especially around labour issues.
Conflicts & Controversies
There are a number of issues beginning to emerge from Chinese foreign investment in general, and BRI projects in particular. These revolve around debt and threats to national sovereignty, land grabbing, displacement, human rights abuses in conflict zones, environmental impacts, public health concerns and labour violations.