Trade
The multilateral trading system is the kernel of China’s food security
Author: Jikun Huang, Peking University
China’s food imports have increased significantly since the nation joined the World Trade Organization (WTO) in 2001. Annual imports and net imports of food reached US$160 and US$93 billion, respectively, between 2019–2021. But as rural incomes rise and China’s population falls the gap for trade to fill between domestic food production and consumption in the future is uncertain.
Soybean for animal protein feed and soybean oil is China’s largest food import — imports exceeded 100 million tons in 2020 and averaged 95 million tons annually between 2019–2021. Maize replaced edible oils as China’s second largest import commodity in 2021. Other major food imports are meats, dairy and sugar. China is also the fifth largest food exporter, following the United States, the Netherlands, Brazil and Germany and is the largest exporter of vegetables, fruits and fish.
A scarcity of arable land and water are drivers of China’s rising food imports. China’s population (1.4 billion) is 18 per cent of the global population but China only has 8 per cent of global arable land. Per capita water availability is only one quarter of the global average. Technological and institutional innovations, market reforms and rising inputs and investment in agriculture have enabled China’s real value of agricultural output to grow more than 5 per cent annually in the past 40 years. But this growth in production is still not enough to meet China’s growing demand for food.
Rapid income growth and moderate population growth has increased China’s demand for food, particularly meats. China’s per capita GDP increased from US$1053 in 2001 to US$12,741 in 2022. China’s population increased from 1.28 billion to 1.41 billion over the same period. Although China is the world’s largest food importer, its average annual per capita net food imports (US$64) between 2019–2021 were lower than countries with relatively large populations but scarce arable land. These countries include the United Kingdom (US$457), Japan (US$422) and South Korea (US$535) between 2019–2021. This situation implies China has largely explored its domestic production capacity and could import more food in the future.
International trade has helped China balance food supply and demand. China’s WTO membership resulted in the full liberalisation of soybean trade (only a 3 per cent tariff rate remains) and lower tariffs on meats and other foods (at about 10–12 per cent). Strategic commodities such as rice, wheat and maize are subject to a 65 per cent tariff beyond defined import quotas. Imported soybean, maize and edible oils have largely met China’s rising demand for animal feed, cooking oil and other food products since 2001.
Within China’s 2020 Food Security Law (to be formally issued in 2023) and 2021 Anti-Food Waste Law, China has set food security goals and strategies in response to rising pressures on food imports. The primary goals are to ‘secure food grains (rice and wheat) domestically’ and to be ‘basically self-sufficient in cereal (rice, wheat and maize) production’. If ‘basically self-sufficient’ means 90 per cent or so of those grains are produced domestically, there may be room to import more maize.
To achieve these goals, China will enhance its agricultural research and development capacity and technological innovation, protect cultivated land and improve soil quality. China also implemented a new green agricultural development strategy which focuses on promoting ecological diversity, resilience and sustainability in agriculture and low carbon agriculture.
While China’s future food imports will largely depend on China’s efforts to increase its domestic food production and the international trade environment, two other factors are likely to play a role. First, China’s demand for meats will continue to rise with incomes until at least 2035. Rising incomes — especially rural incomes in less developed regions in western and central China — will further boost demand for livestock products and other high value foods such as vegetables, fruits and fish.
China has a comparative advantage in the production of vegetables, fruit and fish and will meet its own growing demand but rising demand for meats and animal protein feed will exceed domestic production. Trade will need to fill the gap between production and consumption. Importing soybean and maize to raise livestock production (and meet soybean oil demand) would be preferable over directly importing meats from potentially…
Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
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