VZCZCXRO0871
OO RUEHCN RUEHGH RUEHVC
DE RUEHBJ #3263/01 3410954
ZNR UUUUU ZZH
O 070954Z DEC 09 ZDK
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7093
RUEHRC/DEPT OF AGRICULTURE WASHDC
INFO RHEHNSC/NSC WASHDC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC

UNCLAS SECTION 01 OF 05 BEIJING 003263 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/TPP/MTAA/ABT ARYAN 
STATE FOR C MPLOWDEN 
STATE FOR J BOBO 
STATE PASS USDA/ERS 
STATE PASS USDA/FAS/OSTA BERMAN/PORTER/JONES 
STATE PASS USDA/FAS/OCRA CHINA DESK 
STATE PASS USDA/OGA 
STATE PASS USDA/APHIS/SIMMONS/HERON 
STATE PASS USTR FOR STRATFORD 
STATE PASS USTR CLARKSON 
STATE PASS FDA/DEITZ 
STATE PASS EPA/WOZNIAK 
 
TREASURY FOR OASIA 
 
E.O. 12958:  N/A 
TAGS: SNAR SENV EAGR ETRD ECON CH VN
 
SUBJECT: CHINA QUIETLY USHERS IN AG BIOTECH REVOLUTION 
 
BEIJING 00003263  001.3 OF 005 
 
 
(U) This cable is Sensitive But Unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) In early November 2009, China authorized the first 
commercialization of major biotech food crops.  A government website 
confirmed their approval of phytase corn and Bt rice. Despite little 
fanfare, this will revolutionize China's agriculture and may be the 
global agricultural development of the decade.  Successful 
utilization of plant biotechnology by millions of Chinese rice 
farmers will likely significantly defuse, if not end, debate about 
the safety of the technology in China and possibly the developing 
world. END SUMMARY. 
 
LITTLE FANFARE, MAJOR MOVE 
-------- ------------------------------------------ 
 
¶2.  (SBU) On November 21, 2009, Beijing-based Origin Agritech 
announced that it is the first company to receive de-regulated 
status for genetically modified corn for planting in China. 
Confirmed by China's Ministry of Agriculture (MOA), Origin's phytase 
corn product received the final biosafety certificate that permits 
its domestic sale and marketing.  China also granted a biosafety 
certificate to Huazhong University and Dr. Zhang Qifa for Bt rice. 
Reuters first announced the Bt rice news on November 27 and it was 
picked up by the Chinese media on November 30.  On December 3, MOA 
posted formal confirmation of both authorizations on its website. 
The cultivation of corn will be limited to Shandong province and 
rice will be limited to Hubei province.  Moreover, provincial seed 
registration procedures will likely prevent the first direct sales 
to farmers until at least the 2012 planting season. 
 
¶3.  (SBU) In 2008, seven million farmers grew biotech crops in 
China, about half of the global total. Chinese farmers grew biotech 
crops on 3.8 million hectares of land, making China the sixth 
largest producer of biotech crops by land area.  Prior to this 
announcement, the list of genetically modified plants approved for 
planting in China included:  cotton, tomato, sweet pepper, petunia, 
poplar, and papaya.  Cotton and poplar trees are the only biotech 
plants grown on a large-scale in China.  There is also limited 
production of biotech papaya.  China also currently permits 28 
varieties of biotech corn, cotton, canola, sugar beet, and soybean 
to be imported for processing. 
 
CHINA ALREADY USES BIOTECH, WHAT'S THE BIG DEAL? 
--------------------------------------------- --- 
 
¶4.  (SBU) China's record on biotechnology is already impressive, but 
the agricultural world has been waiting expectantly for China to 
decide how it would approach the application of plant biotechnology 
in food crops.  Why is the deregulation of biotech corn and rice is 
a ground-breaking event in Chinese agriculture and possible the 
history of this technology?  The answer is that China's application 
of plant biotechnology was narrow and omitted several key aspects of 
a country that intends to be a leader in the technology.  There are 
three main reasons why current application has heretofore been 
considered "narrow":  1) avoiding non-food crops; 2) using only 
proven technology; and 3) avoiding decisions related to 
environmental safety. 
 
¶5.  (SBU) First, China's commercial use of the technology is almost 
exclusively limited to non-food plants.  Focusing on non-food plants 
minimizes the need to analyze the impact on human health, thus 
reducing risk to regulators and the personal consequences of making 
an incorrect decision. In addition, food security concerns do not 
come into play if the crop fails to produce as advertised or various 
factors lead to yields that are less than conventional varieties. 
Biotech papaya is an exception, but a very minor crop that accounts 
for far less than 1 percent of total biotech planted area.  In fact, 
this rationale also applies to phytase corn because it will not be 
 
BEIJING 00003263  002.4 OF 005 
 
 
used directly in human food. 
 
¶6.  (SBU) Second, the majority of the technology in use is proven 
technology, first tested and used in the United States.  For 
example, the majority of the biotech planted area consists of a 
version of Roundup Ready cotton created in the United States and 
misappropriated for use in China.  China's biotech papaya was also 
originally developed in the United States.  Using proven technology 
also limits the risk taken by Chinese regulators, which makes these 
early deregulated events safe choices for hesitant bureaucrats. 
 
¶7.  (SBU) Third, the current biotech agricultural crops are not 
native to China or have relatively unimportant wild relatives in 
China.  This is a very important consideration.  The stakes are far 
higher for regulators when dealing with plants that have wild, weedy 
cousins or where wild relatives are still important sources of 
genetic information for seed developers.  Pollen drift is of 
particular importance in the debate about biotech rice in China and 
the rest of Asia.  For this reason, the Chinese government poured 
extensive time and money into environmental risk analysis. 
 
¶8.  (SBU) Though Chinese leaders have long stated that biotechnology 
can be safely used after proper evaluation, no large-scale 
commercially viable food crops were granted a safety certificate for 
the three political and scientific reasons mentioned above.  Even 
though China has advanced research in all major crops and in dozens 
of traits, the Ministry of Agriculture has tabled previous biosafety 
certificate applications and prohibited certain advanced trials; 
this was notably the case for vitamin A enriched "golden rice." Many 
experts blamed the delay on risk-averse bureaucrats who wanted a 
zero-risk situation in terms of biosafety and press/public reaction 
in order to protect their careers. 
 
LOGJAM BROKEN 
------------ 
 
¶9.  (SBU) Many Chinese senior researchers had been discouraged from 
further research and investment in plant biotechnology by the 
barriers faced by developers of food crops and of China-origin 
technologies.  Cotton is one of the most agrochemical-intensive 
crops and Chinese researchers for years have shown the significant 
reduction in chemical use and improved worker health associated with 
biotech cotton.  Despite cotton's obvious success, there was a 
feeling of frustration in the research community by 2008. 
 
¶10.  (SBU) However, in early October 2009, local contacts reported 
to AgAttache that there was a private meeting between Premier Wen 
Jiabao and developers of high tech products, including agricultural 
products, to discuss these issues.  He reportedly told the group 
that while China was a leading investor in biotechnology, it was 
failing to get new events to market.  Wen went on to emphasize that 
state funded technology should not only be developed, but used as 
well.  This message was seen as the "final word" on the subject and 
a strong signal to reluctant bureaucrats that they could and should 
move forward and begin approving biotech events without fear of 
career suicide if problems arose or there was negative public 
reaction. 
 
¶11.  (SBU) Chinese researchers in all agricultural fields have been 
encouraged by Wen Jiabao's support and the new commercializations. 
Not only does it mean that existing research can now accelerate, it 
also means that the Ministry of Agriculture will no longer be 
reluctant to distribute the billions of dollars that have been 
pledged to agricultural research.  China will now likely forge ahead 
with many of the first generation products that provide benefits to 
producers and also second generation traits that are more consumer, 
plant stress and environment focused.  During bilateral meetings, 
China has repeatedly emphasized that their top priority is 
drought-tolerant traits in corn and other food crops. 
 
BEIJING 00003263  003.3 OF 005 
 
 
 
¶12.  (SBU) Background regarding China's biotechnology research and 
regulatory process can be found in FAS China's Annual Biotechnology 
Report.  The most recent update was published on August 3, 2009, and 
is labeled as GAIN Report CH9060.  It can be found at 
www.fas.usda.gov. 
 
PRODUCERS EXPECTED TO BENEFIT FROM CHANGES 
------------------------------------------ 
¶13.  (SBU) Bt technology has a long history of use in the United 
States, including Bt potatoes, Bt corn, Bt sweet corn, Bt sugar 
beet, and Bt alfalfa.  In the case of Bt crops, the gene of interest 
produces a protein that kills harmful plant pests and allows growers 
can use Bt traits as an alternative to spraying insecticides.  The 
-Bt delta endotoxin was selected for many crops because it is highly 
effective at controlling Lepidoptera larvae at the stage when they 
cause the most damage to the plant. The protein is very selective, 
generally not harming insects in other orders (such as beetles, 
flies, bees and wasps). 
¶14.  (SBU) Phytase is currently used as an additive in animal feed 
to breakdown phytic acid in corn, which holds 60 percent of the 
phosphorus in corn. Phytase increases phosphorus absorption in 
animals by 60 percent. Phosphorus is an essential element for the 
growth and development of all animals, and plays key roles in 
skeletal structure and in vital metabolic pathways. Phytase, as an 
additive for animal feed, is mandatory in Europe, Southeast Asia, 
South Korea, Japan, and other regions for environmental purposes. 
¶15.  (SBU) Phytase transgenic corn, developed by and licensed by 
Origin from the Chinese Academy of Agricultural Science (CAAS) after 
seven years of study, can allow feed producers to eliminate the need 
to phytase and corn separately. It will also eliminate the need to 
mix the two ingredients together, thus saving time, machinery, and 
labor for feed producers. 
¶16.  (SBU) Origin's GMO phytase-producing corn is expected to reduce 
the need to add inorganic phosphate supplements to feed as the 
animals will directly absorb more phosphate.  The replacement effect 
reduces feed cost. Additionally, inorganic phosphates may be 
contaminated with fluorine and heavy metal residues created in the 
manufacturing process.  These fluorine and heavy metal residues in 
the feedstuff are toxic to animals and dangerous to humans. 
 
¶17.  (SBU) As described above, these traits are not directly related 
to yield.  The benefits of these traits largely mean lower input 
costs for farmers (Bt rice) or the feed manufacturing chain (phytase 
corn), which ultimately benefit the farmer through lower input costs 
or a premium sales price.  There will be some yield advantage to Bt 
rice because of reduced pest damage, but the primary yield 
attributes of the seed remain its conventionally-bred genetics. 
 
NOT SO FAST - PRACTICAL IMPACT LIMITED FOR NOW 
--------------------------------------------- ----- 
 
¶18.  (SBU) While granting the biosafety certificate is a milestone 
in terms of public policy, it will likely be several years before 
these seeds are in the hands of farmers.  First, seed companies will 
need to register each biotech seed variety with provincial 
authorities and prove stability and effectiveness.  [Note. This 
requirement applies to conventional varieties as well. End Note.] 
Testing can take two years or more.  Following provincial approval, 
the company will then need to replicate enough seed for commercial 
sale.  As a result, Chinese farmers may not see these seeds on sale 
until the 2012 planting season or beyond.  Though farmers and 
livestock producers may want to see the technology in fields sooner, 
this is a normal timeframe for the development and marketing of new 
seeds in China, conventional or biotech.  Another puzzling 
limitation is that the crops were each authorized for planting in 
only one province, which will severely constrict their commercial 
viability if the scope of use is not later broadened.  Sources 
suggest that this limitation was the trade-off for being the 
 
BEIJING 00003263  004.3 OF 005 
 
 
pioneering commercialization. 
 
¶19.  (SBU) The commercialization of these crops in China could pose 
challenges for U.S. regulators, especially if China decides not to 
seek import approval.  U.S. regulators have no/limited knowledge of 
these events and, despite Chinese assurances, the events could get 
into trade channels, thus raising the possibility that a biotech 
event unapproved for use in the Unites States is being imported. 
 
¶20.  (SBU) Chinese (whole grain) rice exports are about $24 million 
and corn exports are very minimal.  However, rice and corn 
by-products are pervasive in small quantities as food ingredients in 
processed foods, which make up the bulk of Chinese exports of food 
products to the United States.  This makes exports of corn or rice 
containing products much larger but also hard to precisely 
determine.  Though trade is small, how will China deal with exports? 
 Will the Chinese companies seek regulatory approval for their 
products in export markets like the United States?  MOA has stated 
to AgAttache that foreign registration is the company/developer's 
responsibility, though they will provide some informational 
resources in a way similar to what FAS does for U.S. companies. 
 
¶21.  (SBU) China has already had problems in biosafety containment 
with experimental Bt rice, which is somewhat similar to the U.S. 
experience with biotech rice.  According to the Chinese Government, 
there was "a case of illegal use" of Bt 63 rice in Hubei province in 
2005 that resulted in the limited but unapproved planting of the 
rice in 2005 and 2006.  Though China claims to have eliminated Bt 
rice from cultivation, it was detected in export shipments to Europe 
and New Zealand in 2007 and 2008.  Thus, questions about China's 
next steps relating to export markets in terms of deregulation and 
potential certification of food products have significance for U.S. 
regulators and consumers.  Discussions on this subject were 
initiated by U.S. biotechnology regulators during the 2009 
U.S./China Biotechnology Working Group meeting. 
 
PRESS NOT INVITED SO FAR 
------------------------ 
 
¶22.  (SBU) Surprisingly, the news about phytase corn was not even 
initially released in China and Bt rice not mentioned at all.  The 
corn news was released by Origin for benefit of its US shareholders 
and Reuters announced the Bt rice event.  The Origin CEO told 
AgAttache that MOA recommended that he not release the news, though 
he finally persuaded them to the valuable nature of the news for his 
investors.  MOA is very conservative and risk averse when it comes 
to biotechnology policy and controversy and the Chinese have very 
close reign on negative comments about biotechnology in agriculture. 
 [Note. MOA publically ignored the EU complaints about Bt rice 
contamination of export shipments and, with the exception of a 
subdued Greenpeace, the Chinese press did not even run the story. 
End Note.] 
 
¶23.  (SBU) However, given that rice is such a staple part of most 
Chinese citizens' diets, a public campaign to promote Bt rice seems 
inevitable either now or when the rice hits the consumer market. 
Given the high profile of certain rice researchers/academicians and 
the developer Zhang Qifa, China is likely to roll out a 
high-visibility campaign to laud the achievements of its own 
researchers and smiling peasants whose health will improve due to 
using less pesticides.  The first indications of a tentative press 
rollout are a series of small articles published in the People's 
Daily appearing on December 1 and 3. 
 
COMMENT - GLOBAL SIGNIFICANCE 
------------------- 
 
¶24.  (SBU) This move by China may prove to be the concluding chapter 
in the initial debate about plant biotechnology.  Though around for 
 
BEIJING 00003263  005.2 OF 005 
 
 
decades, various actors have promoted doubts about safe use of the 
technology, especially in developing countries.  Though almost 
thirty countries plant 140 million hectares each year, the big 
developing countries have not moved into biotech food crops in a 
significant way with the exception of large food exporters.  As 
China moves to start using plant biotechnology, largely for domestic 
purposes, the size and interconnectedness of the country will expand 
the sheer numbers of farmers growing biotech crops, consumers eating 
the derived food, and products developed outside of the 
multinational technology companies.  China's sheer size encourages 
other developing countries to follow its lead and marginalizes those 
blindly opposed to the technology itself.  If the indications are 
correct and India also approves biotech food crops, the world will 
be a much more receptive place for the safe application of the 
technology than just a few years ago. 
 
¶25.  (SBU) However, forging ahead with the promise of biotechnology 
is predicated on China's safe use of it.  While China has been 
rightly blamed for negligence in other instances regarding safety 
issues, the current application and safety assessment of 
biotechnology generally appears to have been done reasonably well 
with close attention paid to human, animal, and environmental 
impacts.  China's increasing investment in this area and its 
potential impact on the U.S. consumer and environment suggest that 
cooperation with China grows more important as it becomes a global 
leader in this technology. 
 
HUNTSMAN