Understanding China’s Agricultural Investments in Africa

South African Instit

ute of Inte

rnat

iona

l Affa

irs

African perspectives. Global insights.

China in Africa Project

O C C A S I O N A L P A P E R N O 1 0 2

Understanding China’s Agricultural Investments in Africa

N o v e m b e r 2 0 1 1

H e l e n L e i S u n

A b o u t S A I I A

The South African Institute of International Affairs (SAIIA) has a long and proud record

as South Africa’s premier research institute on international issues. It is an independent,

non-government think-tank whose key strategic objectives are to make effective input into

public policy, and to encourage wider and more informed debate on international affairs

with particular emphasis on African issues and concerns. It is both a centre for research

excellence and a home for stimulating public engagement. SAIIA’s occasional papers

present topical, incisive analyses, offering a variety of perspectives on key policy issues in

Africa and beyond. Core public policy research themes covered by SAIIA include good

governance and democracy; economic policymaking; international security and peace;

and new global challenges such as food security, global governance reform and the

environment. Please consult our website www.saiia.org.za for further information about

SAIIA’s work.

A b o u t t h e C h I N A I N A F R I C A P R o J e C t

SAIIA’s ‘China in Africa’ research project investigates the emerging relationship between

China and Africa; analyses China’s trade and foreign policy towards the continent; and

studies the implications of this strategic co-operation in the political, military, economic and

diplomatic fields.

The project seeks to develop an understanding of the motives, rationale and institutional

structures guiding China’s Africa policy, and to study China’s growing power and influence

so that they will help rather than hinder development in Africa. It further aims to assist African

policymakers to recognise the opportunities presented by the Chinese commitment to the

continent, and presents a platform for broad discussion about how to facilitate closer

co-operation. The key objective is to produce policy-relevant research that will allow Africa

to reap the benefits of interaction with China, so that a collective and integrated African

response to future challenges can be devised that provides for constructive engagement

with Chinese partners.

A ‘China–Africa Toolkit’ has been developed to serve African policymakers as an

information database, a source of capacity building and a guide to policy formulation

SAIIA gratefully acknowledges the generous support of the main funders of the

project: The United Kingdom Department for International Development and the Swedish

International Development Cooperation Agency.

Project leader and series editor: Dr Chris Alden, email: [email protected]

© SAIIA November 2011

All rights are reserved. No part of this publication may be reproduced or utilised in any form by any

means, electronic or mechanical, including photocopying and recording, or by any information or

storage and retrieval system, without permission in writing from the publisher. Opinions expressed are

the responsibility of the individual authors and not of SAIIA.

Please note that all currencies are in US$ unless otherwise indicated.

A b S t R A C t

Since 2000 China has started to strengthen its agricultural co-operation with Africa in

trade and other commercial activities. It has also increased its agricultural investment in

Africa. With China’s rapid economic rise, the global economic downturn and its uncertain

recovery, and the challenge of climate change, China’s agricultural investment in Africa has

developed against a backdrop of closer economic ties with the continent.

Although agricultural growth has increased in Africa in recent years, food security

remains a severe challenge. International organisations and programmes, such as

the UN millennium development goals, have called for greater investment in Africa to

reduce poverty and eradicate hunger. Despite international and local concerns, China’s

investment in Africa in infrastructure and agricultural technology and training could facilitate

agricultural growth in Africa. China itself has demonstrated sustainable growth in agriculture,

improvement in the livelihood of small-scale farmers, and success in reducing rural poverty.

The paper analyses the driving factors behind China’s agricultural investment in Africa,

particularly from the perspectives of economic development and market factors, and

concerns about food security. It considers the implications of China’s experiences in terms

of institutions, productivity and technology. Finally, the paper addresses the issues of the

‘Green Revolution’ and ‘green technology’ in the context of China’s agricultural investment

in Africa, and suggests policy recommendations for further studies.

A b o u t t h e A u t h o R

Helen Lei Sun is a visiting fellow at the London School of Economics. She is a research

fellow at the Centre for Futures and Financial Derivatives of China Agricultural University,

and has taught agricultural economics at the School of Agricultural Economics and Rural

Development of China’s Renmin University. She has a PhD in Agricultural Economics from

the University of Reading, and an MSc in Economic History from the London School of

Economics.

The views expressed in this publication are the author’s own and do not necessarily

reflect the views of others. The author thanks Dr Chris Alden (London School of Economics,

author of China in Africa)1 for his modification and generous support, Dr Isabelle Tsakok

(former senior economist, World Bank), and Liz Wilson (deputy head of the Agriculture for

Impact Programme, Imperial College London) for their helpful comments.

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S A I I A O C C A S I O N A L P A P E R N U M B E R 10 2

C H I N A I N A F R I C A P R O J E C T

A b b R e v I A t I o N S A N d A C R o N y m S

BIT bilateralinvestmenttreaty

CAD China–AfricaDevelopment(Fund)

CATERAR China–Africa Trade and Economic Relationship Annual Report

CDB ChinaDevelopmentBank

ChinaEximBank Export–ImportBankofChina

CNY Chineseyuan

CSFAC ChinaStateFarmsAgribusinessCorporation

FAPRI FoodandAgriculturePolicyResearchInstitute

FDI foreigndirectinvestment

FOCAC ForumonChina–AfricaCooperation

FX foreignexchange(reserves)

HRS HouseholdResponsibilitySystem

MCC MinistryofCommerceofChina

MDG MillenniumDevelopmentGoal

R&D researchanddevelopment

SOE state-ownedenterprise

UNCTAD UnitedNationsConferenceonTradeandDevelopment

UNDP UnitedNationsDevelopmentProgramme

U N d E R S T A N d I N G C H I N A ’ S A G R I C U L T U R A L I N v E S T M E N T S I N A F R I C A

5


I N t R o d u C t I o N

Since2000ChinahasaccelerateditsinvestmentinAfricasignificantly.Accordingto

the2010China–Africa Trade and Economic Relationship Annual Report(CATERAR),its

foreigndirectinvestment(FDI)inAfricaincreasedfrom$220millionin2000to$1.44

billionin2009,2reaching$13.04billionby2010.Forthefirsthalfof2011,China’snon-

financialsectorFDIachieved$820 million.3China’sFDIinAfricahasincreasedrapidly

andhasdiversifieditsapproachtoincludecentralgovernment-led,stated-ownedand

private investments.China–Africa relationsbroadlyaddress issuesofpolitics,4 trade

relations,5andanthropologyandsociology.6Chinaisrapidlybecominganimportant

aiddonorandinvestor inAfrica,7andisusingthecontinentnotonlyasasourceof

rawmaterialsandpotentialnewmarkets,butalsotobolster itsownpositiononthe

internationalstage.8

Forsomeobservers,China’sagriculturalinvestmentinAfricahasbeenasourceof

frictionintherelationship,9withspeculationthatChinamayjointheexport-oriented

‘landgrabs’bybigtransnationalfirmsthathaveoccurredsincethefoodcrisis inthe

developing world began with price spikes in the late 2000s.10 However, China also

hasmuchtoofferAfricaintermsoflessonslearntfromitsownsuccessinagricultural

growth,alleviatingpoverty,11andachievingtheMillenniumDevelopmentGoal(MDG)1

initseradicationofextremepovertyandhunger.Indeed,China’sinvolvementinAfrica’s

agriculturalsectorisalreadyevidentwithFDItotalling$30millionin2009.12China’s

officialdatashowsthatagriculturewasjust2%ofitstotalFDIin2009.However,its

investmentsareexpectedtoincreaseinAfrica’sagro-processing,resource-basedagriculture

andagriculturalcommodities.13ChineseprojectsinAfricainvolveawiderangeofsectors

inagriculture.Theseincludeagribusiness,14investmentsanddevelopmentprojects.15

China’sownexperienceinagricultureisperhapsasimpressiveasitisrelevanttomany

countriesinAfrica.Chineseagriculturehasbeenfundamentallyimportanttoitseconomic

development.Before reformstarted in1979,Chinawasanagricultural society,with

morethan80%ofitspopulationlivinginruralareas.Themajorityofthesepeoplewere

poor,andhungerandpovertywerewidespread.China’seconomicreformstartedinthe

agriculturalsectorandledtorapidagriculturalgrowthandpovertyreduction,itssuccess

gainingworld-widerecognition.Chinaclearlydemonstratesthatpovertyandhunger

canbemitigatedsignificantlybyempoweringagricultureinitseconomicdevelopment.

Indeed,theWorldBankstatesthatChina’sagriculturalgrowthwasthree-and-a-halftimes

moreeffectiveinpovertyalleviationwhencomparedwithgrowthinothersectorsofits

economy.16Chinareducedthenumberofpeoplelivinginpovertyinruralareasfrom85

millionin1990to35.97millionbyendof2009,therebyachievingthetargetofhalving

theproportionofpeoplelivinginpovertyaddressedbytheUnitedNationsDevelopment

Programme(UNDP).Globally,thegreatestreductioninpovertyoccurredinEastAsiaand

thePacific,wherethepovertyratedeclinedfrom78%in1981to17%in2005andthe

numberofpeoplelivingonlessthan$1.25declinedbymorethan750 million.Muchof

thisdeclinewasinChina,wherepovertyfellfrom84%to16%,leaving627millionfewer

peoplelivinginpoverty.17

In contrast, agricultural growth in Africa has been slow. Poverty in Africa is

predominantlyrural.18Inmostoftheregion’scountries,agricultureemploys60–80%of

thelabourforceandishometothevastmajorityofthepoor.19Thelast30yearshave

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seenminimalgains,andinsomecasesmarkeddeclines,inagriculturalproductivityand

foodconsumptionperperson.Africa’ssolutionforeradicatinghungerandreachingthe

MDG1remainsitshighestchallenge.Globally,thenumberofpeoplelivinginabsolute

povertyhasbeenindeclineforaround25years,yetinAfricathiscontinuestoincrease.20

Althoughover70%ofthecontinent’spoorliveinruralareasanddependonagriculture

fortheirfoodandlivelihood,financialdevelopmentassistancefrominternationalaid

programmesandorganisationshasdecreasedoverthepasttwodecades.21In2004Africa’s

agriculturalsectorreceivedjust4%ofOfficialDevelopmentAssistance(ODA),compared

with17%in1977.22Therehasbeenlimitedinvestmentinruralareasduringthisperiod,

includinginruralroads,withmostsmallfarmersreceivingverylittleaid.23

AgriculturalinvestmentisimperativefortargetingtheMDG1,particularlyinAfrica.

TheUNFoodandAgriculturalOrganisation(FAO)estimatesthatanextra$30billionper

yearneedstobeinvestedinagricultureandsafetynetstoensurethattheMDG1target

ofhalvingthenumberofhungryismetby2015.Africancountrieshavethehighestrate

ofmalnourishedandundernourishedpeopleintheworld.China’sinvestmentinAfrican

agricultureisparticularlytimelyinlightoftherecentstrengtheningofChinaandAfrica’s

economicco-operation.However,existingresearchlacksevidenceonthecorrelation

betweenChina’s investment andAfrica’s agricultural growth andpoverty reduction.

Giventhepaucityofdata,itishardtoassesstheimpactofChina’sinvestmentinAfrica,

exceptinananecdotalsense.ItisimportanttounderstandwhyChinahasacceleratedits

agriculturalinvestmentinAfrica,andtheextenttowhichChina’sinvestmenthashadan

impactonAfricanagriculturalgrowth.

A N A ly S I N g C h I N A ’ S A g R I C u l t u R A l I N v e S t m e N t I N A F R I C A

Underits10thFive-YearPlanforNationalEconomicandSocialDevelopment(2001–05),

Chinaadoptedastrategyofinternationalco-operationtostrengthenitsoutwardeconomic

development,referredtoasits‘goingout’(zou chu qu)strategy.Theagriculturalsectoris

animportantcompositionofits‘goingout’strategypolicyanditsgoaltoensuredomestic

foodsecurity.24,25Chinahasprovidedaid toAfrica, including itsagriculturalsector,

since1956.26TheaidprogrammesinAfricanagricultureweresubsumedunderChina’s

diplomacyand,althoughlimited,helpedtopavethewayfortheircurrentagricultural

co-operation.27

China has carried out a series of policies encouraging well-established Chinese

enterprisesandprivatecompaniestoundertakeagriculturalinvestmentanddevelopment

projectsabroad,includinginAfrica.RecentlyChineseoverseasfarminghasenhanced

partnershipprogrammesthroughbilateralinvestmenttreaties(BITs).Bytheendof2005

ChinarankedsecondworldwideintermsofthenumberofBITsconcluded,with117

agreementsintotal, including28withAfricancountries.China’sencouragementand

incentiveshavepromotedFDIoutflows,suchasforeignexchangepolices;specialand

general tax incentives;creditand loans; foreignexchangeallowance;and favourable

import and export policies, such as quotas and tariffs. China’s policy to encourage

outwardinvestmenthasencounteredtwomainbarriers.Theseareapprovalprocedures

forinvestmentprojectsandthetransferabroadofforeignexchangeorotherassetsfor

investmentuse.28For instance,Chinese local enterprisesmayneed toprocess their


7


approvalproceduresforFDIprojectsatprovinciallevelinordertoinvestorconduct

businessesoverseas.However,somebanks,fundmanagementandinsurancecompanies

areallowedtouserespectivechannelstogatherfundsandpurchaseforeigncurrenciesto

engageinoutwardFDI.Deregulationofsupervisionandpermissionalsoincludesforeign

currentaccounts.ChineseindividualsareallowedtouseChineseyuan(CNY)toexchange

foreigncurrencyatacertainlevelfrombanks.

SincethethirdMinisterialConferenceoftheForumonChina–AfricaCooperation

(FOCAC), held in Beijing in November 2006, China has accelerated agricultural

investmentinAfrica,usingoldtiestobuildnewpartnershipsofco-operation.Atthe

High-levelSymposiumonChina–AfricaCooperativeandInvestment,29heldinBeijingon

September2011,theministeroftheMinistryofCommerceofChina(MCC)ChenDeming

stated that therewereseveral important issues thatneeded tobeaddressed toassist

Africandevelopment.HenotedthatdespiteAfrica’srichresourcesinland,hungerissues

hadyettoberesolved.TheministerstatedthatChinahadadjusteditsaidpolicyinAfrica

inrecentyears,changingitsprioritiesfromareassuchasconstructiontoagricultural

development,healthandeducation–withagricultureandfoodissuesasthetoppriority.30

At present, the key actors and stakeholders of China’s investment in Africa’s

agriculturalsectorincludepolicymakers,academics,state-ownedcompanies,specialised

banksandprivateenterprises.ThestructureofChina’sgovernmentincludesnational-level

andprovincial-leveldepartments,municipalities,aswellasautonomousregions.

Box 1: Key actors and stakeholders of China’s investment in Africa

China’s government (policymakers) in charge of agriculture and commerce, such as China’s

Ministry of Agriculture and Ministry of Commerce.

Provincial municipalities and autonomous regions.

Academics in universities or research institutes, and agro-industries at national or regional

level; relevant co-operative platforms such as China–Africa co-operative forums and

China–Africa development funds.

State-owned agricultural corporations and enterprises, such as the China National

Agricultural development Group Corporation, China State Farms Agribusiness Corporation,

China Oils and Foodstuffs Corporation, and private entrepreneurs.

State-owned banks, such as the Export–Import Bank of China (China Exim Bank) and

China development Bank (CdB).

Source:Author’sown

China’s overseas farming investments comprise two key categories of enterprise

management:privateenterprisesandstate-ownedenterprises(SOEs).OriginallyChinese

SOEs mainly conducted their agricultural business in Africa. Since the mid-1990s

thesehavebeenjoinedbymanyprivateagriculturalenterprises,mostofwhichhave

beensmall-scaleenterprises.Since2005anewfamilyofsmall-scaleprivateenterprises

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haveestablishedthemselvesinAfrica.Theseenterprisesarehighlyflexibleandadapt

quicklytolocalconditions.However,theyarelesscompetitivethantheSOEswiththe

latter’sgreaterfinancialandhumancapitalresourceswhichresultsintrackrecordof

winningstate-fundedaidprojectsinAfricancountries.Forinstance,ChinaStateFarms

AgribusinessCorporation(CSFAC)beganitsinvestmentinAfricaaslongagoas1990,

conductingmainlyaidprojects.InrecentyearstheCSFAChasalsoadopteddifferent

channelsofinvestment,includingFDIinAfrica.Itcontinuestoinvestinaidprogrammes,

whichenablesthecorporationtoobtainloansfromChina’sgovernmentsupportfundsfor

financialaidprogrammeswithrelativeease.TheCSFAChasdemonstratedtheimportance

ofcapitalsupportforsuccessfulagriculturalinvestmentprojects,suchasitsinvestment

intheChina–ZambiaFriendshipFarm.

InrecentyearsChina’sbankshavealsoengagedinAfricanagriculture.ChinaExim

Bank,theCDB,IndustrialandCommercialBankofChinaandotherfinancialinstitutions

haveextendedsubstantialcommercialloanstoAfricancountries.31Supportedbythe

CDB,ZimbabweandChinasignedanagreementworth$585 millionaimedatrevivingthe

southernAfricancountry’sagriculture,healthandminingsectors.32Chineseacademics

havealsobeeninvolvedinresearchrelatedtoAfricanagriculture.Theseincludethe

AfricanStudiesoftheChineseAcademyofSocialSciences,theChina–AfricaResearch

CentreofZhejiangNormal(ShiFan)University,andotherinstitutesatbothnationaland

provinciallevels.

Accelerating China’s outward investment

FormorethantwodecadesnowChina’seconomyhasbenefitedfromitsmarket-oriented

reform in linewith itsopening-uppolicies.Sustainedgrowthhas led toadvantages

in economic scale andcapital resources,whichhaveenabledChina tobuild sound

foundationsonwhichtolaunchits‘goingglobal’strategy.China’sadvancesinagricultural

technology,suchashybridricebreeding,havealsohelpedtoaccelerate itsoutward

investment,togetherwithitsaccumulatingcapitalresourcesandoutwardinvestment

policy.33

Since the 1990s China has carried out its policy of an export-led economic

development strategywhichhas resulted in rapidgrowth inFDI inflows.By2010,

China’saccumulatedFDIinflowsreached$105.7billion,accordingtotheMCC.Thishas

contributedtoitscurrentpositionastheworld’sleaderinforeignexchange(FX)reserves

withreservesof$3197.5billioninJune2011.However,incomparisonwithChina’sFDI

inflows,itsoutflowsremainsmall.TheratioofChina’sinflowstooutflowsis1:0.09.This

isnotonlymuchlowerthanaveragelevelofdevelopedcountries’ratioof1:1.14butis

alsobelowtheworldaverageof1:1.11.34ThusChina’sFDIinflowsandoutflowsshowa

seriousimbalancethatisnotevidentevenindevelopingcountries.

Chinahasaccelerated itsoutwardFDIacross theworldsince2004.China’sFDI

outflowshaveincreasedby123%from2004to2005.TheannualFDIoutflowsincrease

averaged46%between2001and2010.FDIoutflows reached$68.8billion in2010

accordingtotheMCC,andaccountedfor5.2%oftheworldtotalin2010.35In2009

China’sFDIaccounted for5.1%of theworld’s total, ranking itnumberoneamong

developingcountriesandfifth intheworld,accordingtothe2010World Investment

Report.36


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ChinahasalsoincreaseditsFDIinAfricasubstantiallysincethethirdMinisterial

ConferenceofFOCACin2006.

Figure 1: China’s FDI outflows ($100 million), 1990–2008

Source:MCC,2009 Statistical Bulletin of China’s Outward Foreign Direct Investment.MCC,National

BureauofStatisticsofChina&StateAdministrationofForeignExchangeofChina,Beijing,2010

Figure 2: China’s outward FDI stocks in Africa ($10,000), 2003–09

Note:MCCofficialstatisticsfornon-financialsectorsareonlyavailablefor2003and2009.

Source:MCC,2009Statistical Bulletin of China’s Outward Foreign Direct Investment.MCC,National

BureauofStatisticsofChina&StateAdministrationofForeignExchangeofChina,Beijing,2010

AsreflectedinFigure3onpage10,China’soutwardFDIcumulativestocksinagriculture

areonly3.1%.ThisissmallcomparedwithothersectorsinAfricabutisexpectedto

increase,withagriculturalco-operationbecomingapriorityforpolicy-makersinChina

andsomeAfricancountries.China’sinvestmentinAfrica’sagriculturewasmorethan$134

millionin2009,anditestablished50agriculturalenterprisesandover100farms.37China’s

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400

300

200

100

199

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199

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2003 2004 2005 2006 2007 2008 2009

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investmentapproacheshavealsodiversified,forinstancethroughdevelopmentfunds

andfinancialassistance.TheChina–AfricaDevelopment(CAD)Fundwasestablished

on14March2007andisfundedfullybythestate-ownedCDB,whichhasbeenakey

institutioninsupportingChina’sinfrastructuraldevelopmentandthepromotionofbasic

andstrategicindustries.TheCDBhasplayedapivotalroleinfundingnewdevelopment

projectsandadvancingeconomicdevelopmentinareassuchasagricultureandpublic

infrastructure.38

Figure 3: China’s outward cumulative FDI stocks in Africa by industry (%), 2009

Source:China,InformationOfficeoftheStateCouncil,WhitePaperforChina–AfricaEconomicand

TradeCooperation.Beijing:PeoplePublishing(Renmin),2010

3.1% 3.2%3.4%

4.0%

5.4%

13.9%

15.8%22.0%

29.2%

Agriculture

Scientific research and technological services

others

Wholesale and retail

business services

Finance

Construction

manufacturing

mining, quarrying and petroleum


11


Box 2: China’s financial investment in Africa

Chinese companies and the CAd Fund launched a project worth over $20 million for cotton

cultivation and processing in Malawi. In 2009, through its ‘company plus farmers’ approach,

this project involved over 50 000 farming households to grow cotton. They processed

17 000 tonnes of seed cotton and produced 6 800 tonnes of lint.

Source:China,MCC,CATERAR (China–Africa Trade and Economic Relationship Annual Report).

ChineseAcademyofInternationalTradeandEconomicCooperation,Beijing,2010

ChinaisenteringitsnewdevelopmenteraforagriculturalinvestmentinAfricaunder

globaleconomicuncertainty.ThispertainsparticularlytothefinancialcrisisintheUS,

asChina’sFXreservesarecomposedmainlyofUSdollarsintheformofUStreasury

bonds.39TheChinesegovernmenthasbeenunderpressurefromWashingtonandother

tradingpartnerstoeasecurrencypoliciesandothermeasures,whichtheyclaimkeep

theCNYundervaluedandswellChina’stradesurplus.40Moreover,Chinahasrecorded

highlevelsofinflation,whichwas6.2%inAugust2011andfarhigherthantheUSrate

of3.8%atthesametime.41ThepresidentoftheWorldBank,RobertZoellick,42cited

inflationasChina’smostimportantissue.HesuggestedthatCNYappreciationwouldhelp

toeaseinflation,because‘anappreciatedcurrencylowerspricesathomeoftheforeign

goods.’ChiefeconomistattheBankofCommunications,LianPing,43saidthattheCNY

appreciationshouldnotbetheonlywaytocurbinflation.Thesefactorsmightalsobe

consideredasoneofthedriversacceleratingChina’soutwardFDIinAfricanagriculture.

Market-driven factors

Chinahasbecometheworld’slargestimporterofseveralagriculturalcommoditiesto

feeditsravenouseconomy.It istheworld’s largest importerofoilseeds,andissetto

increasetheseimports,aswellasthoseofvegetableoil,palmoil,soybeanandrapeseed.

TheFoodandAgriculturePolicyResearchInstitute(FAPRI)hasforecastedthatChina’s

soybeanimportswillincreasefrom33.7million tonnesin2007/08to52million tonnes

by2017/18.FollowingthisperiodChinawillaccountfor78%oftheworld’sgrowthin

soybeanimports,withworldsoybeantradeprojectedtoincreasesignificantlybymore

than27 million tonnes.44China’spalmoil importsarepredictedtoincreasefrom5.5

million tonnesin2007/08to10.8 million tonnesin2017/18.Overall,China’simport

demandforagriculturalproductsisexpectedtogrowatdouble-digitratesoverthenext

25years.45

China’shighdemandforagricultural-processingandlivestock-feedindustriescould

placepressureondomesticsuppliesofcorn(maize).TheChinesegovernmentdoesnot

encourageproductionofbiofuelthroughcorn.Inthelongrun,Chinamaybecomea

netcornimporter,46andshiftfrombeinganetwheatexporterof2.3milliontonnesin

2007/08toimporting1.4milliontonnesin2017/18.Itisalsoexpectedtoincreaseits

cottonimportsfrom3 million tonnesto6.1 million tonnesduringthesameperiod.47

ChinaisalsoincreasingitsinvestmentinAfrica’sbiofuelagriculturalproducts.Itis

makingeffortstodiversifyitsstructureofenergyresourcesintransferringfromfossil

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fuel tobiofuelproduction, tomitigate the impactofclimatechangeand to improve

environmentalconditions.China’sgovernmenthasstatedthatthecountrywilluseminor

crops,suchascassava,palmoilandsugarcane,ratherthanstaplefoodcropstoproduce

biofuel.TheChinesegovernmentstillemphasisessafeguardingfoodsecurityasitstop

priority.Domestically,Chinaisfacingseriouschallengesofmeetingitsfoodconsumption

and biofuel production requirements with the current scarcity of land resources.

Accordingly,China’sgovernmenthasaccelerateditsimportsofagriculture-relatedraw

materialsforbiofuelproductionfromAfrica.

Box 3: China’s investment in biofuel products from Cameroon

In 2006 the state farm of China’s Shanxi Province announced its establishment of a

5 000-hectare rice and cassava plantation in Cameroon. The project will be financed by

FOCAC funds through China Exim Bank at a cost of $62 million.

Source:JanssonJ,Patternsof Chinese Investment, Aid and Trade in Central Africa (Cameroon, the DRC

and Gabon),BriefingPaper.Stellenbosch:CentreforChineseStudies,2009

Chinaistheworld’slargestcassavaimporterandNigeriaistheworld’slargestcassava

exporter.Nigeriaproduces120 000 tonnesofcassavaannually,ofwhich5 000tonnes

areexported toChina.Thecountryhopes toreceive5 billionNigeriannaira(about

$38 million)fromcassavaexportseveryyear.48InadditiontoChina,BrazilandIndiaare

alsointerestedininvestinginAfrica’sbiofuelproduction.Forinstance,Indiahasrecently

pledged$250milliontoaWestAfricanBiofuelsFund.49

Box 4: China’s biofuel investment in Mali

In 2009 Chinese companies invested in a 60-hectare experimental plot to cultivate crops

including wheat, corn and sorghum. Chinese firms have also signed contracts with the

Malian government to establish a joint venture in sugar production. They plan to process

6 000 tonnes of sugar cane daily, and to produce 100 000 tonnes of white sugar and 9.6

million litres of alcohol yearly.

Source:China,MCC,CATERAR,op. cit.

BiofuelproductionhaschangedChina’sagriculturalstructureandhascontributedto

China’sinvestmentinAfricanagriculture.Therapidgrowthofthebiofuelsindustryhas

contributedtomajorstructuralchangesinglobalagriculturalproduction.50Inparticular,

theprofitabilityofgrowingcropsforbiofuelfeedstockisanimportantincentiveforprivate

investmentinthisactivity.51

GiventhesheersizeofChina’smarket,evenarelativelysmallchangeinChina’sfood

consumptionpatternmayhaveamajorinfluenceontheglobalagriculturalcommodities


13


market.52ChinaissettoincreaseitsagriculturalinvestmentinAfrica,withtheChinese

governmentencouragingcompaniestoinvest.53

Challenges of global food security

Foodsecurityisbecomingaglobalconcernwiththeincreasingsqueezeonwater,landand

energyresources,aswellasvolatilityinworldfoodpricesandconcernabouttheimpact

ofclimatechangeonagriculture.Growingcompetitionfortheseresources,inadditionto

theoverexploitationoffisheries,isaffectingtheabilitytoproducefoodandexacerbating

theimpactoffoodproductionontheenvironment.54During2006–08foodshortages

becameaglobalreality,withtheescalatingpricesofcommoditiesbeyondthereachofvast

numbersofpeople.Internationalagencieswereunpreparedfortheseshortages,andthe

WorldFoodProgrammewarnedthatrapidlydiminishingfoodstocksmightnotbeableto

addressthecrisis.55By2020itisestimatedthattherewillbeanextra1.5billionmouths

tofeed.56

In2008theworldemergedfromthefoodcrisis.57Thecrisishasforcedtheinternational

communitytoreassesswhether,andhow,thecurrentglobalfoodproductionsystemwill

beabletomeetvariouschallenges,includingreachingtheMDG1targetonhungerand

poverty.ArecentWorldBankstudyshowsthatafurther44millionpeoplehavebeen

pushedintopovertyduetothepriceincreaseofmanyagriculturalcommoditiesbymore

than25%fromJune2010toDecember2010.58

ChinaandAfricawillfacemoreseriouschallengesoffoodsecuritythanotherparts

oftheworld.Chinaistheworld’slargestdevelopingcountry,andAfricaishometothe

largestnumberofdevelopingcountries.ThecombinedpopulationofChinaandAfrica

accountsforoverone-thirdoftheworld’stotal.Thesuccessofglobalagriculturehasnot

beensharedequally.InAfrica,perpersonfoodproductionhasnotbeenabletokeepup

withpopulationgrowth.Poorpeoplearemorevulnerabletomeetthechallengesofrising

foodpricesandshortagesinfoodsupply.Sincemostfoodproductsaretradeableonthe

worldmarket,foodsecuritydependsonthepurchasingpowerofthepoor,ratherthan

onthemanagementofdomesticsupply.59Thefoodandhungerproblemismostseverein

Africa,andfoodinsecurityisworsening.Forinstance,inWestAfricatheGambiaimports

morethan80%ofitsricerequirement.60

Self-sufficiencyinfoodisbelow50%foranumberofcountriesinAfrica.OfAfrica’s

53countries,21arefood-aidrecipients.In2009,265millionpeoplesufferedfromhunger

andmalnutrition,resultinginthedeathof5 millionpeoplefromstarvationanddisease.61

Accordingtothe2009UNMDGreport,in1990,thebaselineyearfortheMDGs,57%of

Africa’spopulationwerelivinginextremepoverty,earninglessthan$1.25aday.62Africa’s

progressineradicatinghungerhasbeenslow,withaslightdecreaseintheproportionof

undernourishedfrom32%ofitspopulationin1990–92to29%in2008.63

Globalpovertymeasuredatthe$1.25-a-daylinehasbeendecreasingsincethe1980s.

Thenumberofpeoplelivinginextremepovertyfellfrom1.9billionin1981to1.8billion

in1990,andtoabout1.4 billionin2005.64AlthoughAfricahasmadeprogress,thishas

beeninsufficienttoputAfricaontargettoachievetheMDG1by2015.

China’sfoodsecurityhasalwaysbeenitsmainconcern,giventhatithastheworld’s

largestpopulationanditslimitedcultivatedlandperperson.Chinahasinsistedonaself-

sufficientfoodpolicyasafundamentalnationalpolicytoaddressitsfoodsecurityissues.

14



Althoughthispolicyhasworkedtodate,thecountrywillfaceseriouschallengesinthe

future.Chinaisalsofacingotherchallengesinresponsetoclimatechange,including

environmentalcontamination,aswellasvolatileworld foodprices in thecontextof

globalisation.

CurrentlyChinasuccessfullyfeeds20%oftheworld’spopulationbyusingjustover

9%oftheworld’stotalcultivatedlandand6%oftheworld’sfreshwater.Overthelasttwo

decadestheaccelerationofurbanisationandindustrialisationhasresultedinadecreaseof

agriculturalland.From1996to2006China’sarablelandareasdecreasedby8.71 million

hectares.TheChinesegovernmenthasannouncedthatitwillretainaminimumof121

millionhectaresofarablelandtoguaranteeitsnationalfoodsecurity.65Between1997and

2005therapidprogressofurbanisationandindustrialisationledto9.63 millionfarmers

migratingtotownsandcities.Urbanisationandindustrialisationhavealsoresultedinthe

confiscationofcollectivelandareasinruralChina.Asmanyas40–50millionfarmers

havelosttheircultivatedland.Thiscontinuestoincreaseby3millionfarmerseveryyear,

andby2030thetotalnumberisexpectedtoreach110million.66

China’simprovinglivingstandardsandrisingmiddleclasseshaveresultedinagreat

demandforprocessedconsumablesofmeat,dairyandfish.Withoutanincreaseinfood

supply,thereareseriouschallengesoffeedinganincreasinglywealthypopulation.In

addition,Chinaisdevelopinganagingsociety,especially inruralareaswhereyoung

labourershavemigratedtotownsorcitiesinsearchofwork.Thishascontributedto

adecreaseinagriculturalproductivity.Chinastillhasaround200millionpeopleliving

belowthegovernment’sofficialpovertyline.CurrentlytheChinesegovernmentclaims

thatthecountryhas95%offoodself-sufficiency,apercentagethatsomeexpertssuggest

willbeverydifficulttomaintaininthenexteightto10years.

C h I N A ’ S A g R I C u l t u R A l I N v e S t m e N t S I N A F R I C A

Agriculturalinvestmentiscentraltotheprovisionoffoodandtheeradicationofpoverty

andhunger.Growthintheagriculturalsectorisakeymeansofreducingpoverty,67and

agriculturalgrowthandruraldevelopmentareoffundamentalimportancetoachievingthe

MDG1.Accordingly,China’sgovernmenthasstronglyencouragedagriculturalinvestment

inAfricainanefforttomeetandmaintaintheseobjectives.

Investmentisessentialtoagriculturalgrowth.ChinaitselfhasreceivedsignificantFDI

inflowsinagriculture,from$600milliontoover$1.2billionyearlybetween1998and

2008.68However,therecentdeclineinagriculturalinvestmentindevelopingcountries

hassignificantlyhinderedcountriesandtheglobalcommunity inmeeting theMDG

1 targets.69AUNnewscentre70highlighted the importanceofgreater investment in

agriculturetogenerateincomeandsupportrurallivelihoods.Ofthedevelopingworld’s

1.4billionextremelypoorpeople,70%liveinruralareas–particularlyinAfrica.Thus

ruraldevelopment is themostrapidandmosteffectivewayofreducingpovertyand

malnutrition.71

ChinahasdiversifieditsagriculturalinvestmentinAfricathroughdifferentapproaches.

Theseincludeaidprojects;andinvestmentsbyboththeChinesegovernmentandChinese

companiesininfrastructure,technologydemonstrationandtrainingprogrammes.The

bulkofChina’sfutureeffortsininvestmentdevelopmentwillfocusontheruralsector,


15


andlargeinvestmentswillbeneededtoincreaseagriculturalproductionandbuildrural

roads.China’sagriculturalstrategyinAfricahasindeedbroughtanewgrandinvestment

totheagriculturalsectorsofmanynations,andhasthepotentialtochangeagriculture

significantlyonthecontinent.72

Table 1: China’s agricultural investment in Africa

Country Year Farm or investors Dimension (ha)

Type of land use Market

Cameroon 2006 Sino Cam Iko Company

10 000 Rice, vegetables, manioc

Local

Cameroon 2007 Shanxi Province Agribusiness Group

5 000 Rice, manioc, ostriches

Local

dRC 2009 ZTE 100 000 Oil palm World

Guinea 1997 Koba Farm 1 800 Hybrid rice Local

Mali 1961 Farako 400 Tea Local

Mali 1996 Sukala Refinery 6 000 Sugar Local

Mali 2008 Sukala Refinery 10 000 Sugar Local

Mauritania 1967 M’pourie 1 400 Rice Local

Mozambique 2005 Hubei Agribusiness Group

1 000 Rice, cotton, soybean, vegetables

Local

Senegal 2008 35 000 Sesame China

Sierra Leone 1977 Magbass Sugar 1 280 Sugar Local

Sudan 2010 ZTE 10 000 Wheat and corn Local

Tanzania 1969 Mubarali Rice Farm 6 000 Rice, pigs, cows, poultry

Local

Tanzania 1970 Ruvu Rice Farm 800 Rice Local

Tanzania 1970 Morogoro 6 900 Sisal World

Tanzania 2009 Chongqing Seed 300 Rice Local

Togo 2009 Complex Sucier d’Anie

1 200 Sugar cane Local

Uganda 1973 Tilda (original kibimba)

700 Rice Local

Uganda 1987 doha Rice 800 Rice Local

Source:ChaponniereJR,GabasJJ&ZQi,‘ChinaAfricainagriculture:Abackgroundpaperontrade,

investmentandaidinagriculture’.China–DACStudyGrouponAgriculture,FoodSecurityand

RuralDevelopment,Bamako,27–28April2010

16



China’s agricultural-aided projects in Africa

ChinahasadoptedseveralapproachesinitsagriculturalinvestmentinAfrica.Agricultural-

aidedprojectshavebeenregardedasplayinganimportantroleinbuildingeconomic

andtraderelations,particularlyintheearlydays.Primaryinvestmentsfromthe1950s

tothe1980swereChinesegovernment-aidprojects.By2009Chinahadcompleted884

plant-aidedprojects,ofwhich142wereagriculturalprojects.Chinastartedcommercial

investmentsinAfricainthe1980s.Thenumberofinvestmentprojectsandtheamountof

investmentsweresmall,owingtothelimitedcapabilityoftheinvestorsthemselves.Ofthe

102projectsChinainvestedinAfricafrom1979to1990,theaverageinvestmentwasjust

$500,000.Comparedwithothersectors,China’sfinancingofagricultural-aidprogrammes

inAfricacontinuestobesmall.

Table 2: China’s aid projects in agriculture and other sectors, 2009

Total Agricultural projects

Industrial projects

Schools Hospitals Stadiums Conference centres

Others

884 142 145 71 54 53 62 357


ChinahasbeenincreasingitsagriculturalaidinAfricaforgrainproductioninparticular.73

Agricultural projects aided by China have promoted agricultural development in

recipientcountries.Brautigam74pointedoutthattheChinesepressroutinelypraisesthe

achievementsofitsforeignaidteams,althoughscantobjectiveandpubliclyavailable

evidenceexistsontheoutcomesoftheseprojects.Lin75alsosuggestedthatinvestment,

ratherthanaid,isaneffectivesolutionfordevelopment.

China’s investment in rural infrastructure

Africa’sratesofagriculturalproductivityarenormallylowduetopoorwaterirrigation

systems and infrastructure. In sub-Saharan Africa, water resources and irrigated

agriculturearenotdevelopedtotheirfullpotential.Currentlylessthan4%ofrenewable

waterresourcesinAfricaareusedforagriculture.Barriersincludethelackoffinancial

andhumanresourcestobuildirrigationandrelatedruralinfrastructureandtoacquire

agricultural technology; and inadequate access tomarkets.This constrainsprogress

towardspovertyreduction.76

Accordingtoofficialstatistics,ChinahasassistedAfricancountries,suchasZambia

andNigeria,inbuildingover500infrastructureprojects.77Zoellick78statedthatChinahas

beenparticularlysignificantasasourceoffinancinginfrastructureinvestmentinAfrica.

AWorldBankreportestimatesthatChina’sinvestmentinAfrica’sinfrastructurefrom

2001–06wasroughlycomparabletothatfinancedbyalltheOrganisationforEconomic

Co-operationandDevelopmentcountriescombinedoverthesameperiod.


17


Box 5: China’s agricultural infrastructure investment

Currently Chinese companies are working on the design and construction of 12 major

grain storage facilities in Zambia. Covering a total area of some 30 000 square metres,

the completed grain barns will have a storage capacity of 100 000 tonnes, thereby greatly

enhancing the country’s storage capacity and food security.

Chinese enterprises have built numerous agricultural infrastructure facilities and irrigation

facilities in Africa. The MCC has reached agreements with 35 African countries in supporting

large-scale infrastructure, of which 70% of investments are in Nigeria, Angola, Sudan and

Ethiopia. There are also other investments in Congo, Mali, Mozambique and Tanzania, such

as contracts for infrastructure in bulk commodities worth $8 billion in Congo.


China’s technology demonstration projects and training programmes

Chineseagriculturalprofessionalsarehelpingtoestablishagriculturaldemonstration

basesinAfrica.Chinahasorganisedtrainingonissuesincludingthecultivationofrice,

vegetables,meatprocessing,andtheuseofagriculturalmachinery.Mutuallearningand

knowledgesharingareimportantfordevelopmentandpovertyreduction.

Box 6: Technology demonstration centres

In 2009 the construction of Chinese-aided agricultural technology demonstration centres

commenced in Benin, Cameroon, Ethiopia, Liberia, Mozambique, Sudan, Tanzania and

Uganda. In addition to offering training, production, and administrative and residential

facilities, the centres will help to leverage China’s strong agricultural expertise by inviting

Chinese experts to share their knowledge with local people in order to boost Africa’s

agricultural development.

In Guinea-Bissau, Chinese experts established 11 rice production demonstration areas

covering a total of 2 000 hectares. Yields per hectare reached 8–9 tonnes. There were 530

tonnes of fine varieties yielded and subsequent expansion of the plantation area amounted

to 3 530 hectares. The yields for many new varieties were over three times higher than

those of varieties currently used.


18



Table 3: Chinese-aided agricultural technology demonstration centres in Africa

Country Technology centre’s focus

Benin Crop cultivation demonstration and farming technology training

Cameroon Research, technology demonstration and training on agricultural technology

Ethiopia Horticultural plants cultivation and livestock farming technology demonstration and training

Liberia Rice and corn cultivation technology transfer, training, development of plant varieties

Mozambique Soybean and corn cultivation and processing demonstration and training

democratic Republic of Congo

Crop cultivation demonstration and training

Rwanda Rice, juncao, mulberry cultivation, and technology and demonstration training on soil and water conservation

South Africa Research, technology demonstration and training on fresh-water aquaculture

Sudan Crop cultivation and irrigation technology demonstration and training

Tanzania Crop cultivation demonstration, development of improved plant varieties, training

Togo Research and training on agricultural technology

Uganda Aquaculture technology demonstration, technology transfer and training

Zambia Agricultural technology demonstration and training

Zimbabwe Corn cultivation technology demonstration and training

Note:Juncaomeansfungi(suchasmushrooms)andcaomeansgrassinChinese.JuncaotechniqueswereinventedinChinain1983byProfessorZhanxiLin.


Withitslongagriculturalhistory,Chinahasextensiveexperienceinbothtraditionaland

modernagriculturaltechnology.Inparticular,ithascomparativeadvantagesinagricultural

sectorsinvolvinglabour-intensiveproductionsandprocessing,suchasfisheries,gardening

andpoultry farming.Byworld standardsChinese agricultural technologies, suchas

hybridrice,areadvancedandhavecontributedsignificantlytothecountry’sagricultural

growth.AfricancountrieshavealsobenefitedfromChina’sadvancedtechnology.One

suchexampleisGuinea-Bissau,whereChinaStateFarmandAgribusinessCorporation

collaboratedwiththeChinaHybridRiceEngineeringResearchCentreinintroducing

high-yieldinghybridrice.


19


Box 7: Expertise and training

From 2007–09 China sent 104 senior agricultural technology experts to 33 African countries

to assist in the creation of agricultural development plans. China also organised extensive

training on topics including the cultivation of rice and vegetables, fishery management,

meat processing, and the use of agricultural machinery.

In 2009 China provided training to 568 African agricultural officials and technicians. Subject

areas included rural economic reform and development, food production, soil and water

conservation and dry cultivation techniques, the development of new cotton varieties, the

use of agricultural machinery and continuing education for agricultural teachers.


TheanecdotalevidencereflectedinBox7suggeststhatChina’sinvestmentinagricultural

researchanddevelopment(R&D)couldfacilitateAfricanagriculturalgrowthandpoverty

reduction.By2012Chinaplanstosend50agriculturaltechnologygroupsand2 000

agriculturalprofessionalstoAfrica.79Exchangingknowledgeandideasisalsoimportant

forsustainabledevelopmentinagriculture.

Giventhepaucityofdata,itisdifficulttomeasuretheimpactofChina’sinvestmenton

reducingpovertyandpromotinggrowthinAfrica.Ingeneral,investmentinagricultural

R&Dandtechnologyareimportanttoimproveagriculturalproductivityandtohelpreduce

poverty.Thirtle,LinandPiesse80foundthatinvestmentinagriculturalR&Dthatraises

agriculturalvalueconsiderablyimprovedratesofreturn,inbothAfrica(22%)andAsia

(31%).ThusagriculturalR&Dpaysforitself,asincreasedproductivityresultsinbroad-

basedgrowth,whichreducespovertyingeneral.Fan81alsopointedoutthatgovernment

expenditureonagriculturalR&Dhas thehighest returnon labourproductivityand

povertyreduction,followedcloselybyinvestmentsinfeederroads.Moreover,investment

inagriculturalextension82developssystemsthroughwhichtechnologiescanbeextended

to and adoptedor adaptedby farmers, and several studieshave shown thepositive

impactof such investmentsonagriculturalproductivityand incomes.83Agricultural

extensioncreatesawarenessoftechnologiesanddevelopments,andstrengthenstheknow-

howandskillsofproducersinusingthesetechnologies.Itcanalsoraisetheabilityof

farmhouseholdstodemandtechnologiesandfurtheradvisoryservicesthatmeettheir

specificneeds.Therefore,investmentsinagriculturalR&D,extensionandtechnology

demonstrationsareimportantforimprovingfarmers’skills,agriculturalproductionand

thelivelihoodofsmallfarminghouseholds.

I m P l I C A t I o N S o F C h I N A ’ S d e v e l o P m e N t e x P e R I e N C e F o R A F R I C A

China’sexperiencehasproventhathigheconomicgrowthandrapidpovertyreductionare

achievable.Indeed,China’sstartingpointwasevenlessfavourablethanAfrica’spositionin

theearly1980s.AfricastandstobenefitconsiderablyfromChineseagriculturalexperience

20



in agricultural and rural growth, evidence-based policy-making, pro-poor policies,

institutional reform and government roles in delivering changes and implementing

innovativeprogrammes.84

Chinahasachievedthemostrapidlarge-scalepovertyreductioninhumanhistory.85

BeforeChina’sreformstartedin1979,itfacedseriousfoodshortagesanditsagricultural

economywas in crisis. Since the reformChinahas achieved an average13%yearly

increase in agricultural gross output value up to 2008.86 Between 1979 and 2004,

500 millionpeoplewereliftedoutofpovertyinChina.AccordingtoLiu,87agricultural

andruraldevelopmentwaspivotalinChina’spovertyreductionanddevelopment.African

countrieshavespentdecadestryingtojump-startagriculturalproduction.Insearchof

newapproaches,manyexpertsarelookingforanswersinChina’simpressiveagricultural

achievements.AfricancountrieswanttolearnaboutChina’sdevelopmentexperience,

particularlyaboutovercomingpovertyandsustainingeconomicgrowth.88

Importantly,China’sexperienceshowsthatasuccessfulpatternofprivateandpublic

partnershipcanleadtosubstantialimprovementsinfarmers’livelihood,eradicatehunger

andovercomepoverty.Theaveragenet incomeofruralresidentsperhead increased

fromCNY134($21)in1978toCNY4,761($746)89 in2008peryear.90Duringthis

periodChinacarriedoutaseriesofinnovativeprogrammes,suchasdevelopingitsnon-

grainsectorandsmallhouseholdenterprises,whicharecriticalforincreasingfarmers’

incomeandcreatingemploymentopportunities.Institutions,technologyandproductivity

continuetobeimportantfactorsforChina’ssuccessfulagriculturaldevelopment.

Institutional perspectives

Institutionalsupportisimportantforagriculturalgrowth.Institutionsmatterineconomic

growth,91andCoase92andNorth93highlightedthevitalimportanceofsocialinstitutions

in economic transformation. Growth will not occur unless the existing economic

organisationisefficient.94Inadevelopingeconomy,achangeinemphasisfrom‘getting

pricesright’to‘gettinginstitutionsright’iskeytothetransitionfromaplannedeconomy

toamarketone.95Indevelopingcountriesandtransitionaleconomies,oftenmarketsare

imperfectornon-existent.

Institutional reformcontributed largely toChina’sagriculturalgrowthduring the

transitionaleconomicperiodfromaplannedtoamarketeconomy.96Beforereformstarted

in1979,ChineseinstitutionswererootedinChina’splannedeconomy.InruralChina,

farmersworkedinproductionteams,whichresultedinlowworkincentives.China’s

reformsintroducedaHouseholdResponsibilitySystem(HRS),whichdistributedlandto

individualhouseholdsforcontractperiodsoffiveyears,laterextendedto10andthento

30years.Landwasdistributedaccordingtothenumberofpeopleineachhousehold.The

HRScreatedincentivesforproductionbygivingfarmersfreedomofland-userightsand

decision-making,linkingrewardscloselywiththeirperformance.Underthenewsystem

farmersbecameindependentproducerswhotooksoleresponsibilityforprofitandloss.97

ReformalsobroughtaboutchangesinChineselaw,withthepromulgationofinsurance

lawinthemid-1990sandtheintroductionofinsurancemarkets.

China has demonstrated the critical importance for developing or transitional

economies to introduce innovativeprogrammes, especially for individualhousehold

producers, inill-functioningornon-existentmarkets.Smallhouseholdsareoperated


21


typicallybypoorpeople,whouseagreatdealoflabour,bothfromtheirownhousehold

andfromtheirequallypoororpoorerneighbours.98Howlocalgovernmentsareableto

deliverthechangesatgrass-rootslevel,particularlywheremarketaccessispoor,isalways

important.Inthetransitionalperiodfromaplannedeconomytoamarketone,overcoming

poorinstitutionalconditionsandill-functioningmarketaccessweresignificantchallenges

inruralChina.TheintroductionoftheHRSenabledsmall-scalehouseholdproducersto

actasindividualagentsineconomicactivities.Thelocalgovernmentplayedanimportant

roleinco-ordinatingtheeconomicactivitiesbetweensmall-scalefarmersandmarkets.

Bycomparison,inAfricamostsmall-scalefarmersarefacingmajorobstaclesthatstart

inthefieldandextendacrosstheentireagriculturalvaluechain.Thesefarmerscanneither

accessnoraffordbasicfarminputs.99Institutionalconditionsarealsomajorobstacles

forsmallhouseholds’farmingproduction.Africalacksinstitutionalarrangementsthat

enhanceindigenousentrepreneurshipandwealthcreation.Thisisthemostimportant

contributortopovertyanddeprivationinAfrica.100Itsabsenceofefficientorganisations

andinstitutionsminimisedthepositiveimpactofinvestmentsandpolicies.Thisabsence

accountsforthelowrateofreturninagriculturalinvestmentsinAfrica,andthepoor

performanceofthesector.101Asignificantaspectofthisneglecthasbeenthefailuretopay

attentiontotheimportanceofsmall-farmer-orientedinstitutionsinAfrica.Asaresultof

thisneglect,coupledwithgeneralmacroeconomicpolicieswithstronganti-agricultural

andanti-peasantbias,themajorityoftheSouthernAfricanDevelopmentCommunity

stateshaveexperiencedstagnantordecliningtrendsinperpersonfoodandagricultural

production.102

Thesuccessoftheseinvestmentprojectsdependslargelyonsustainableinstitutional

environments.Itisalsodependentontheabilityoflocalgovernmentstodeliverchanges

atgrass-rootslevelandtoco-ordinateeconomicactivitiesbetweensmall-scalefarmersand

supplychains,especiallyinAfrica’sconditionsofpoormarketaccess.

It is hard to envisage how China’s experiences in institutional reform can be

transferabletoAfricansociety.Effectiveimplementationofinvestmentprojectsisalso

relatedtohistorical,social,policy,politicalandculturalaspectsinAfrica.Itisimportant

tounderstandhow ‘China’sphenomenon’works forAfrica in thecontextof itsown

institutionalperspectives.AstheformerpresidentofChina,DengXiaoPing,toldGhana’s

President,JerryRawlings,duringavisitin1985,‘Pleasedon’ttrytocopyourprogramme.

Ifthereisanyexperienceonourpart,itistoformulatepoliciesinlightofone’sown

nationalconditions.’

Productivity and technology

Improvementofagriculturalproductivityiscriticalforagriculturalgrowthandpoverty

reductioninAfrica.AlthoughAfricahasexperiencedcontinuousagriculturalgrowth

duringthelastfewyears,muchofthegrowthhasemanatedfromareaexpansionrather

thanincreasesinlandproductivity.103Lowproductivityisoneofthemajordifficulties

thatAfricaisfacing.Inmostcountries,futuresustainableagriculturalgrowthwillrequire

greateremphasisonproductivitygrowthassuitableareasfornewcultivationdeclines,

particularlygivengrowthconcernsaboutdeforestationandclimatechange.104

ComparedwithAfrica,Chinahaspresentedafundamentallydifferentpicture.With

ashortageofcultivatedlandareasandanenormousnumberof farmers,agricultural

22



productivity gains are central to China’s agricultural growth. China’s grain output

reached400billionkilograms in1984, from100billionkilograms in1978. In1984

theChinesegovernmentannouncedthatthecountryhadsolvedthesubsistencelevel

offooddemand.105Chinaisagoodexampleofpovertyalleviationandimprovementin

agriculturaloutput.China’spolicymakersare,however,facedwiththechallengeofhow

tosustaineconomicdevelopmentwithincreasingenvironmentalstress.Today,37%of

China’stotalterritorysuffersfromlanddegradation,andthecountry’sperpersonavailable

landisnow40%oftheworld’saverage.106Degradationincludessoilerosion,deforestation,

salinity,reducedfertilityandsandstorms.Itaffects3.56millionsquarekilometresand

posesadirectthreattoChina’sfutureeconomicprosperity.107

China alsoneeds to considerprotecting itsnatural resources, suchaswater and

soilconservation.Theagricultural ‘GreenRevolution’aimsto implementsustainable

developmentinthecontextofenvironmentalconcernsthatarerecognisedbyinternational

society.Greenagricultureinvolvestheuseof‘greentechnology’todevelopagricultural

production,therebyachievingharmonyamongtheenvironment,economyandpeople.

Agriculturalproductionminimises thewasteofnatural resources,and itscontinued

developmentshouldthusbeconsideredintheattainmentofenvironmentalsustainability.

InAfrica,theconcentrationofthepoorinruralareasandtheriseintheirpoverty

isattributedtolowagriculturalyieldsthatareduelargelytothefailuretoadoptfood

productionmethodsoftheGreenRevolution.108GreenRevolutiontechnologyincludes

the use of pesticides, irrigation projects, synthetic nitrogen fertiliser and improved

crop varieties developed through conventional science-based methods. These skills

and technology need to be adopted in Africa to help offset the worsening effect of

environmentaldegradationinagriculture.Crucially,whethertheGreenRevolutionorany

otherstrategytoboostfoodproductionwillalleviatehungerdependsontheeconomic,

political andcultural rules thatpeoplemake.109When thenewAfricanAgricultural

Revolutioniseventuallyimplemented,itislikelytobebuiltonAfrica’sownindigenous

technologyandknowledgerequirements,andonthenutritionandfoodsecurityneeds

ofitspeople.110Thisischallenging,becausetheadaptionofdifferenttypesoftechnology

needstoconsiderAfrica’sdifferentconditions,ecologyzonesandcrops.

ThereisalsoconcernthatChina’sinvestmentinagricultural-resourcedprojectsmay

posechallengesofmaintainingsustainableenvironmentsinAfrica.Forthisreason,any

promotionofinvestmentsandpolicysupportfordrivingagriculturalproductivityfor

Africanfarmersneedstoconsiderenvironmentalsustainability.

C o N C l u S I o N

ChinahasaccelerateditsinvestmentinAfrica’sagriculturalsector,bothinthevolume

ofinvestmentandinthediversificationofinvestmentmeans.Anecdotalevidenceshows

thatChina’sinvestmentcouldcontributetoagriculturalgrowthandpovertyreductionin

Africa.China’sownsuccessfulexperienceinagriculturalgrowthandpovertyreduction

couldprovidevaluablelessonsforAfrica.

However,Africa’sagriculturalgrowthandpovertyreductionlargelydependsonthe

policiesthatmeetitscountries’conditionsinthecontextofsocial,economic,political


23


andenvironmentalperspectives.Indigenousinstitutionsandculturewillalsoaffectthe

outcomesofChina’sinvestmentinagriculture.

Asthelargestfoodconsumerintheworld,Chinaneedstosourceagriculturalproducts

and commodities from Africa to help meet the needs of its giant domestic market.

China’smarketdemandcouldalsoresultinprofitandbusinessopportunitiesforAfrican

farmers.Africaisdependentonreceivingfinancialassistancetoimproveitsagricultural

infrastructure,suchaswaterirrigation.Agriculturalproductivitycanbeincreasedbythe

exchangeofknowledgeontechnologyandproduction.

Furtherstudiesareneededonconceptualframeworkandmethodologytomeasureand

monitortheimpactsofChina’sagriculturalinvestmentonAfricanagriculturalgrowth,

povertyreduction,anditsachievingtheMDG1.Theextenttowhichtheinvestment

servestheinterestofboththedonorandtherecipient–andtheextenttowhichChina’s

increasedinvestmenthasactuallyimprovedlivelihoodsandreducedpovertyinAfrica–

arealsoareasforfurtherstudies.

Foodsecurityislinkeddirectlytonationalstabilityandnationalsecurity.Agriculture

has played an important role in China’s diplomacy, especially in its South–South

co-operation.Therefore,China’sagriculturalinvestmentinAfricaisrelatedtoitsoverall

bilateralrelationsinthecontextofsocial,economicandpoliticaldimensions.Further

studiesalsoneedtolookattheroleofagriculturalco-operationbetweenChinaandAfrica

intheirownnationalstrategies.

e N d N o t e S

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2 China,MinistryofCommerceofChina(MCC),CATERAR(China–Africa Trade and Economic

Relationship Annual Report).Beijing:ChineseAcademyofInternationalTradeandEconomic

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3 Chen D, Chinese Minister of Commerce, High Level Symposium for China–Africa

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WorldBank,2007.

6 HsuE, ‘Zanzibarand itsChinesecommunities’,Population, Space and Place,13,2,2007,

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Y,‘ChinesefarmsinZambia:Fromsocialistto“agro-imperialist”engagement?’,African and

24



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10 RiceA,‘Istheresuchathingasagro-imperialism?’,New York Times Magazine,16November

2009; Kugelman M & SL Levenstein, Land Grab? The Race for the World’s Farm Land.

Washington,DC:WoodrowWilsonInternationalCenterforScholars;CotulaL,Vermeulen

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23 BigmanD,op. cit.

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27 Ibid.

28 Ibid.

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30 Ibid.

31 ChineseAcademyofInternationalTradeandEconomicCooperation,China–Africa Trade and

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32 Action for Southern Africa,‘Zimbabwe,ChinaSign$585milliontradeagreements’,21March


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35 China,StateAdministrationofForeignExchange.

36 UN,World Investment Report,2010,Switzerland.

37 HighLevelForumofChinaandAfricanAgriculturalCooperationHeldonAugustin2010,

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38 InstituteofDevelopingEconomies,JapanExternalTradeOrganization,‘ChinainAfrica:The

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41 MingZ,‘WhyChina’sInfatuationRateisHigherthanthatofAmerican?’,Shenzhen Business

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42 TianW&HYuanyuan,op. cit.

43 Ibid.

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45 BigmanD,op. cit.

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48 People’s Daily,19January2005.

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50 FlamminiA,2008,www.globalbioenergy.org/fileadmin/user_upload/gbep/docs/BIOENERGY_

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51 UN,World Investment Report,2009,Swaziland.

52 FreemanD,HolslagJ&SWeil,op. cit.

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54 GodfrayHCJ,BeddingtonJR,CruteIR,HaddadL,LawrenceD,MuirJF,PrettyJ,RobinsonS,

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55 MagdoffF&BTokar,Agriculture and Food Crisis: Conflict, Resistance, and Renewal.NewYork:

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56 ConwayG,The Doubly Green Revolution: Food for All in the 21st Century. Ithaca:Cornell

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57 UN,UN Conference on Trade and Development, Addressing the Global Food Crisis: Key Trade,

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58 IvanicM,MartinW&HZaman,Estimating the Short-Run Poverty Impacts of the 2010–11 Surge

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59 WorldBank.WashingtonDC:WorldBank,2005.

60 CeesayMM,‘ManagementofriceproductionsystemstoincreaseproductivityintheGambia,

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61 ‘Building A Bridge for China–Africa Agricultural Cooperation through Political Party

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62 PovertyReductionandtheMillenniumDevelopmentGoals:SituationAnalysis,Africa,United

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63 Ibid.

64 WorldBank,World Development Indicators.Washington,DC:WorldBank,2009.

65 ThiswasaffirmedduringtheStateCouncil’s149thStandingConferenceon6September2006.

66 ChineseAcademyofSocialScience,Annual Report on Urban Development of China,Social

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67 SammisJF,‘StatementbyUSDeputyRepresentativetoECOSOCJohnSammisattheFirstLDC

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68 UN,World Investment Report,2009,Switzerland.

69 Ibid.

70 UN News Centre,‘UNagencyurgesinvestmentinagriculturetofeedgrowingworldpopulation’,

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71 AlsoseeWorldBank,World Development Indicators,op. cit.,2008.

72 RubinsteinC,‘China’seyeonAfricanagriculture’,Asia Times Online,2October2009,http://

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73 China,InformationOfficeoftheStateCouncilofthePeople’sRepublicofChinaWhitePaper

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74 BrautigamD,1998,op. cit.

75 SongTianLin,‘DiscussiononSino-Africacooperativeforumfor10years’,China Talk,2010,

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76 Hanjra MA, Ferede T & DG Gutta, ‘Reducing poverty in sub-Saharan Africa through

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77 ChineseAcademyofInternationalTradeandEconomicCooperation,China–Africa Trade and

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79 YangJiechi,MinisterofChineseForeignAffairs,speechontheMinisterialConferenceofAid

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27


80 ThirtleCG,LinL&JPiesse, ‘Theimpactofresearch-ledagriculturalproductivitygrowth

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104 Ibid.

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html.

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