To tackle food security challenges, China had been boosting domestic production and diversifying agricultural imports even before the Russia-Ukraine war began. But are these measures sufficient for China, a major importer of Ukrainian and Russian agricultural produce, to counter the long-term impact of the crisis? Genevieve Donnellon-May of the Lee Kwan Yew School of Public Policy at the National University of Singapore and Zhang Hongzhou of the S Rajaratnam School of International Studies (RSIS) at Nanyang Technological University (NTU) outline China’s food security strategies and the potential challenges the country faces.
Loading grain for export, Rostov-on-Don: In February, Russia has agreed to sell more wheat to China (Credit: Scharfsinn / Shutterstock.com)
The outbreak of war between Russia and Ukraine on February 24 has created an enormous diplomatic challenge for China and had a significant impact on various aspects of the nation’s economy and development. Ahead of the 20th National Congress of the Chinese Communist Party in the latter half of the year, when Xi Jinping is expected to secure a historic third term as the country’s leader, a key concern for China is the war’s impact on the its food security and, by extension, its stability.
In recent years, despite the central government’s emphasis on the importance of domestic food production, China’s food imports have been rising and are likely to continue to grow. Chinese policymakers have expressed concerns that the country relies on too few agricultural products and suppliers, particularly from the United States. As part of its food security strategy, China has been increasing efforts to diversify imports to reduce its reliance on the US, boost domestic agricultural production, overcome domestic production deficits and meet growing domestic demand. However, the Russia-Ukraine war will likely hinder such efforts.
Although self-sufficiency remains at the core of China’s food security strategy, the focus has shifted from achieving that goal in grains (rice, wheat, corn, soybean and root tubers such as potatoes, and coarse grains) to ensuring basic self-sufficiency in cereals (wheat, rice, and corn) and absolute security in staples (referring to rice and wheat). The overriding objective of China’s food security is to safeguard the country’s rice and wheat supplies. Compared with rice, the importance of wheat as the second staple is often overlooked. Globally, China is the largest wheat-producing country in the world and is reported to have the largest wheat reserve globally, representing over half of the worldwide wheat stock in 2022. China’s current wheat production accounts for over 17 percent of the global total. In recent years, however, the effects of climate change, including extreme weather causing disasters such as severe flooding, have put domestic production of wheat and other grain crops at risk and have caused production deficits.
Despite its huge domestic production and massive wheat stock, China is also one of the world’s leading wheat importers, purchasing nearly 10 million tons of wheat last year. The obvious reason for this is the large gap between domestic and international wheat prices, but the second and more important factor is the structural imbalance in China’s wheat supply: For decades, China’s wheat policies have focused on quantity rather than quality. To a certain extent, the quality of wheat is often sacrificed in favor of quantity. With rising income and shifting food preferences, however, the country now faces a shortage of high-protein wheat.
For years, China’s wheat imports mainly came from Australia, Canada and the US. Because of the trade war with Washington and worsening ties between China and Western countries, Beijing has been trying to diversify the country’s wheat import sources, eyeing Russia and Central Asian countries such as Kazakhstan, which have not only emerged as key exporters in the global wheat market but also have enormous potential for further increases in wheat production.
It is thus not surprising that in recent years, under the Belt and Road Initiative (BRI), China has steadily been importing more and more wheat from Russia, Kazakhstan and Eastern European countries on the one hand and expanding its agricultural investments and encouraging agricultural technological transfer (such as its hybrid wheat technologies) in the region. Notably, during Russian President Vladimir Putin’s visit to China for the opening of the Beijing Winter Olympics in February 2022, Russia and China signed an agreement for China to import wheat from across Russia, a move that could significantly improve China’s wheat supply. That accord was made against the backdrop of potentially the worst winter wheat production in history — heavy rainfall in 2021 delayed the planting of about one-third of China’s usual wheat planting.
The outbreak of the Russia-Ukraine War which has caused the disruption of supplies from Ukraine and wheat export bans on Russia will undoubtedly affect China’s wheat diversification efforts. And Beijing’s push to secure more wheat supplies during the war, in spite of the economic sanctions that many countries have placed on Russia, may bring even more uncertainties to the global wheat market. For instance, the rise of food protectionism, resulting in fewer countries being able to export wheat, combined with the sanctions on Russia and the war in Ukraine (Russia and Ukraine together supply around 26 percent of the world's wheat exports), as well as China’s stockpiling of its own wheat supplies, means that other wheat-importing countries may face competition with each other to buy reduced wheat supplies worldwide. This could also contribute to already-inflated food prices globally.
China's more pressing food-supply challenge is feed, especially soybean and corn, and fertilizers. In 2021, China had to import 28.35 million metric tons of corn, up 152 percent from the previous year, representing 9.4 percent of domestic corn consumption. Most imports came from the United States, Ukraine and Brazil, with Ukrainian imports accounting for one third of the total amount. Although the decrease in US corn imports in recent years can be attributed to the China-US trade war, China had sought out other corn suppliers, importing a considerable amount of corn from Ukraine. Since 2020, China has been Ukraine’s top trading partner, viewing the country as a critical entrepôt for BRI-related commerce, with its agricultural exports becoming increasingly crucial for China. Combined with potential labor shortages and rising gas and fertilizer prices, the Russia-Ukraine war and subsequent disruptions to shipments to China will create significant inflationary pressure.
Soybean, meanwhile, makes up 65 percent of global protein feed supply. Three countries – the US, Brazil and Argentina – contribute 80 percent of global soybean exports. Although China is the world’s fourth biggest soybean grower, the country is also the world’s largest importer, with what it buys from abroad accounting for 84 percent of domestic consumption. Last year, Chinese customs data showed that soybean imports, mainly from the US and Brazil, jumped 13.3 percent to 100.3 million tons.
As China’s reliance on American soybean was viewed as a weak link during the trade war under the previous US administration, China has sought to increase domestic production and encourage soybean production elsewhere, particularly Russia. In 2018, China’s soybean imports from Russia reached 0.8 million metric tonnes, up 64 percent compared to 2017. Given Russia's huge potential to produce soybean, China has exported more agricultural labor to Russia and increased investment in Russian soybean. In 2021, however, Russia imposed a 30 percent tariff on soybean exports in response to increasing food prices.
The Russia-Ukraine war adds another dimension to China’s soybean import concerns. Ahead of the Russian invasion, China’s National Food and Strategic Reserves Administration announced that it would release soybeans from state reserves. Aside from increasing domestic production to encourage self-sufficiency, Beijing may also continue to diversify its import sources of soybeans to ensure a stable supply. But China's ability to add soybean imports from new suppliers faces market and policy uncertainties, and its growth potential remains limited in the short term. For example, this year's prospects of a record Brazilian soy crop were shattered by adverse weather that ended up delaying harvests, with exports far below initial estimates.
While China produces some potash, a potassium chloride-based agricultural fertilizer, domestic production falls well short of the rising demand. China needs about 14 million tonnes (about 15.4 million tons) of potassium chloride per year, nearly half of which is imported. As only a small number of countries export substantial amounts of potash, China’s reliance on imports has been considered a potentially significant threat to its food security, resulting in its increasing domestic production and importing more substantial quantities from Commonwealth of Independent States (CIS) countries, particularly Russia and Belarus, which account for 40 percent of global potash exports. Currently, China imports 7 million tons of potash annually, 30 percent of which is from Russia.
With the ongoing war, sanctions on Russia and Belarus, and a proposed ban on fertilizer exports from Russia, global potash supply will face major disruptions. This will have significant repercussions for food production in countries that rely on potash imports, including China, and for global food security.
The implications of the Russia-Ukraine conflict for food security extend worldwide. The absence of both Ukrainian and Russian grain and fertilizer exports could exacerbate existing food-security concerns and potentially cause social and political instability. Like many other developing economies, China is a major importer of Ukrainian and Russian agricultural produce, particularly grains. For Beijing, food security remains a top priority as China’s heavy reliance on grain imports increases its vulnerability to trade tensions and supply shocks.
In response to these challenges, China is putting more effort into boosting domestic production, diversifying agricultural imports, and releasing wheat and fertilizer reserves. Nonetheless, these measures may not be sufficient to counter the long-term impact of the Russia-Ukraine War, particularly if the conflict is prolonged: China could soon face increased competition from other food-importing countries for supply of grains and fertilizers, while also dealing with persistent deficits in agricultural production at home.
DuBois, Thomas David; and Xiao, Kunbing. (December 15, 2021) “China’s Food Culture is Changing – Why It Matters”, AsiaGlobal Online, Asia Global Institute, The University of Hong Kong.
World Food Programme. (March 2022) “Food security implications of the Ukraine conflict”, WFP, Rome, Italy.
Zhang, Hongzhou. (May 14, 2020) “Covid-19 and the Global Food Supply”, AsiaGlobal Online, Asia Global Institute, The University of Hong Kong.
University of Oxford
S Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU)