Month: March 2015

Can we live without China?

 

The Changing of the Guard.

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Every picture tells a story.

Preamble.

Over recent times as Australian agriculture has endured droughts, poor prices and incompetent governments; amid the chaos there have been two major overriding topics for discussion.

The first has been trying to separate the rumours, the gossip and the chit chat from the truth regarding the extent, the size of Chinese investment in Australian agriculture, in land, as distinct from agribusiness or food processing. 

There is a body of opinion that claims Chinese interests, including Sovereign Funds have made substantial purchases of land in Australia, using a variety of investment vehicles, which have enabled them to avoid scrutiny by the Foreign Investment Review Board (FIRB).

We have the figures from the FIRB and we name who the biggest investors in Australia agriculture have been over recent times and the results will surprise you. China is at the bottom of the list, below Hong Kong. So why the public and in some cases political interest in China who ‘officially’ appear to be a minor investor? Is it xenophobia, fear, nationalism? — they all mean the same thing really. Do we fear China and is that because we don’t understand them? Whose fault is that?

These are difficult questions for us as a people and as an industry. It is a far more serious question for the media, and I believe the media should shoulder a great deal of the blame, because they have wrung every bit of emotion they can out of China and Chinese investment in Australia, giving voice to rumour and innuendo.  Yet the records show that the media have been at least less than diligent and probably lazy in failing to report who the big, billion dollar plus, non-Chinese investors have been in Australian agricultural land over recent years.

The second big question is, forgetting agriculture, can we now manage, as a country, without China? We have all but exported our manufacturing base, everything from engineering, to clothing to hardware to food processing — you name it, what we once made ourselves we now get from China.

If it’s ‘Made in China’ it’s designed to be affordable. The more we buy from China the more dependent we become on them and the more vulnerable we are as the alternatives become uncompetitive.

The resource boom of the last last decade should have made Australia strong but there’s a fly in the ointment, Barclay’s Bank Kieran Davies reports that Australian household debt is equal to 130% of Gross Domestic Product (GDP) this compares to an average of 78% average across the advanced world making us more vulnerable than most to another financial crisis.

So we’ve spent the boom on paying ourselves wages and salaries big enough to build the biggest houses in the world with ‘entertainment centres’ and a bathroom for every resident, double garages to hold the boat and the dual cab 4wd ‘trucks’. Enough left over to holidays to exotic destinations and the like — instead of spending our money on our country, on the infrastructure future generations will need to make us world competitive.

China is now the world’s largest economy. America will fight them for that position — but no matter what happens, China’s influence on the Australia will continue to grow.

Australia’s challenge will be to find the point of balance in our relationship between our greatest ally, America, and the country we cannot manage without — China.

Continue reading “Can we live without China?”

China and Australia – A Little Knowledge could be a Dangerous Thing.

The Chinese Century?

I was reading just today that the view is commonly held in the world of Geo-politics that the 21st century is ‘The Chinese Century’
There have been numerous articles in the ‘Global Farmer’ about China and the challenges that country faces in feeding it’s people today and more importantly the problems it will face in the future as it becomes home to a third of the worlds population.  China is the world’s biggest wheat grower and something like 70% of that area is irrigated. Like many areas in the world the extraction rate on the aquifers on which China relies is greater than the re-charge rate. Soon we will reveal what food China already imports.
There are numerous articles on the www of China’s plans to build a canal from Tibet into China. A State engineer claims in can be done without pumping, which seems extraordinary. Perhaps that will solve their problems, but I gather there are many barriers, not the least being India and international conservation groups. See: The Globalist.
The view is held that irrigated wheat is unsustainable in China and that the area of dry land wheat will grow and China will continue to buy wheat land in other counties where ever it can. With a rapidly ageing farming population in Australia, a large number of farms either for sale voluntarily or being pushed, and with Australian investors keeping their hands in their pockets and off their wallets, I don’t think a few extra dollars will deter either the foreign urban or rural land investor. In fact I think the measure is just plain silly and ignores reality and is a lolly for the anti foreign investor chatterati.
The reality is that real estate, both rural and urban is for sale and there is nothing to prevent anyone from anywhere in the world from purchasing those assets.  We have the most expensive houses in the world, don’t believe me well have a look at this article from Business Insider. So we have only ourselves to blame if we can’t afford our houses and others can.
As for farming land in the next Global Farmer we will show how Australia is the second most expensive country in the world to grow a tonne of wheat, Canada believe it or not, is the most expensive.
The following by Prof Dearing from Southampton UK has certainly helped me get a better perspective on what seem to be China’s voracious appetite for Australian real estate including our farming lands from the far south to the far north.

China farming boom has left ecosystems in danger of total collapse

More intensive agriculture has reduced poverty, but China’s environment can’t handle the pressure.

This lake is not supposed to be green. Greenpeace China, CC BY

China’s push for more intense farming has kept its city dwellers well-fed and helped lift millions of rural workers out of poverty. But it has come at a cost. Ecosystems in what should be one of the country’s most fertile region have already been badly damaged – some beyond repair – and the consequences will be felt across the world.

This is part of a long-running trade-off between rising levels of food production and a deteriorating environment, revealed in recent research I conducted with colleagues from China and the UK. Yields of crops and fish have risen over the past 60 years at several locations we studied in Anhui, Jiangsu and Shanghai Provinces in eastern China. But these are parallelled by long-term trends in poorer air and water quality, and reduced soil stability.

You may ask if this a bad thing. After all, increasing agricultural productivity has been one of the factors responsible for lifting millions of rural Chinese out of poverty. Does it really matter that the natural environment has taken a bit of a hit?

Well yes. For agriculture and aquaculture to be sustainable from one generation to the next, the natural processes that stabilise soils, purify water or store carbon have to be maintained in stable states. These natural processes represent benefits for society, known as ecosystem services.

Indices of food/timber production (red) mapped against ecosystem services (green) across the lower Yangtze river basin. Zhang et al

Throughout the latter half of the last century, these services were being lost relatively slowly through the cumulative, everyday actions of individual farmers. But the problems accelerated in the 1980s when farmers began to use more intensive methods, especially artificial fertilisers – and again after 2004 when subsidies were introduced.

Worryingly, in some localities, the slow deterioration has turned into a rapid downward spiral. Some aquatic ecosystems have dropped over tipping points into new, undesirable states where clear lakes suddenly become dominated by green algae with losses of high-value fish. These new states are not just detrimental to the continued high-level production of crops and fish but are very difficult and expensive to restore.

Pollution of Chao Lake is obvious – even from space. NASA
Click to enlarge

These natural processes are degraded and destabilised to the point that they cannot be depended upon to support intensive agriculture in the near future. The whole region is losing its ability to withstand the impact of extreme events, from typhoons to global commodity prices.

What can be done?

National policy must prioritise sustainable agriculture. This will mean big changes on the farm: fertiliser and pesticides must be applied in the correct quantities at the right time of the year, cattle slurry and human sewage must be disposed of properly, chemicals getting into streams and rivers must be reduced, and fish feed has to be controlled.

Unfortunately, this is easier said than done. Farmers are still generally poor, badly educated and ageing. Good agricultural advice is lacking and big cities still tempt the younger farmers away from their fields. All these factors mean that rapid action is unlikely.

Can you farm too much? EPA

The recent introduction of the Land Circulation reform policy, allows farmers to rent their land to larger combines. The policy is designed to overcome the inefficiencies of small farm holdings but it may not be taken up widely in the more marginal landscapes where potential profits are low.

All the evidence points to a need for a significantly improved system of information and technology transfer to individual smallholders, probably involving a more efficient coordination between agencies.

Global problem

But there’s a larger-scale context to this problem that may affect us all. China’s grain production has risen fivefold since the 1950s, outstripping the pace of population growth. Despite this, the nation is no longer self-sufficient. The shift towards more meat production has placed a demand for soybean and cereal animal feed that can no longer be met internally. In 2012, China imported more than 60% of all the world’s soybeans that were available for export, and cereal imports are also on the up.

Reliance on imports to fill a shortfall in home produce is nothing new. But in China’s case, the additional risk that agriculture is increasingly unsustainable may amplify the demand. The potential scale of demand for imports is bound to have repercussions for global food production and food prices. Unless reforms are introduced quickly, the rest of the world may well find that they are sharing China’s trade-off with nature – through the weekly shopping bill.

THIS ARTICLE ORIGINALLY APPEARED IN ‘THE CONVERSATION’ ON FEBRUARY 26 2015. The Global Farmer thanks ‘The Conversation’ for making this article available.

Author


  1. John Dearing

    Professor of Physical Geography at University of Southampton

Disclosure Statement

John Dearing receives funding from NERC-ESRC-DfID Ecosystem Services for Poverty Alleviation Programme. He is a member of the The Green Party.