Covid-19 lockdowns in China have complicated food distribution. U.S. shoppers experience sticker shock at grocery store. Food insecurity is a problem in both countries. China’s official statistics report that undernourishment fell from 11% in 2001 to 2.5% in 2011. Since then, the government has reported the same figure every year. The US Department of Agriculture reports that 11% of households experienced food insecurity at some point in 2019-2020, including 4% who faced the greatest challenges. Undernutrition is a threat to everyone, but especially to young children, where it can seriously retard their mental and physical development.
The persistence of hunger and malnutrition in the world’s two largest economies is sad and preventable. Both countries produce huge amounts of food and are rich enough to import everything they need. There are many places where this is not true. Hundreds of millions of people regularly suffer from hunger. Drought, war and the covid-19 pandemic compound this tragedy.
This week we look at food and trade, with a particular focus on China and the United States
Food security has always worried Chinese leaders. Each year, the first document officially published by the Chinese government concerns agriculture. In recent years, leaders have advocated frugality and condemned food waste. The government’s 2019 white paper on food security insists on “ensuring basic self-sufficiency in cereals” and strict preservation of agricultural land. It highlighted the increase in cereal productivity and the strengthening of distribution. Just as the Made in China 2025 plan aimed to reduce China’s reliance on imported technology, China sees vulnerability in its reliance on others for food and wishes to minimize it.
But relying on domestic producers does not always bring security or lower prices. This was clear when African swine fever claimed half of China’s pig herd, but it’s also true in everyday life. Food in China often costs more than elsewhere compared to income. Chinese households devote a much larger share of their income to it (28% in 2019) than American households (13%). This disparity not only reflects the high importance placed on food in Chinese culture, but also the incredible productivity of American agriculture and how restricting food imports is likely costing Chinese consumers.
Chinese household spending, 2019
US household spending, 2019
China is trying to feed 20% of the world’s population, with 10% (and declining) of the world’s arable land and 6% of the world’s fresh water. It uses a lot of fertilizers and pesticides. It seeks to make its agriculture more environmentally sustainable, but its fishing fleet collects protein from all over the world, leading to accusations of overfishing and conflicts with other countries. To meet its needs, help preserve resources and maintain peace, it will need to improve domestic production, reduce losses, strengthen trade relations and forge and respect agreements on the maintenance of the fishery.
The United States is an agricultural superpower, but many criticize American practices for depleting land and contributing to climate change. A tiny fraction of the American population manages to satisfy a large part of the domestic demand and to provide for the needs of the others as well. The United States exports about one-fifth of its total agricultural production, of which about one-fifth, or $33 billion, goes to China. It has often pushed countries and regions to open their markets to products from American farms and ranches. Overall, China is the third largest US market for wheat (after Mexico and the Philippines). It is the number one market for US soybean and corn producers.
Chinese policymakers want the country to be self-sufficient in grain, but shrinking farmland, soil pollution and rising living standards make this unlikely. China therefore imports grain. We have already highlighted imports from the United States (the source of 26% of China’s grain imports), but one-fifth of China’s imported grain came from Ukraine in 2020. Russia has cut off access to this provider. On February 24, China approved a new agreement with Russia to increase wheat imports. It could also turn to Russia for the sunflower oil it bought from Ukraine.
As part of its entry into the World Trade Organization in 2001, China was given a wheat import quota. For two decades, China imported less than half of what it was supposed to buy. In 2019, the United States asked the World Trade Organization to investigate China’s grain import system. The WTO investigation found that China’s system was neither transparent nor fair to private Chinese companies seeking permission to import grain. In 2020, China revised its rose import procedures and applications. At the same time, corn in China has become more expensive than wheat and wheat is being replaced in animal feed. For the first time, China’s wheat imports are now reaching its quota.
China’s rice exports are minimal, but have grown significantly over the past decade, bringing in about $900 million each of the past three years. China’s largest rice export markets are Egypt, South Korea, Sierra Leone, Cameroon, Papua New Guinea and Niger.