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UNCLAS SECTION 01 OF 03 BEIJING 002744 
 
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E.O. 12958:  N/A 
TAGS: EFIN ECON ETRD EAGR EAID PREL CH
SUBJECT: China's Food Security Challenges and 
Opportunities for Engagement in APEC 
 
REF:    A. State 96050 
 ¶B. 9/18/2009 Email from David Moore to Ryan 
    MacFarland and Ann Ryan 
 ¶C. 08 Beijing 3598 
 ¶D. 08 Beijing 4332 
 ¶E. Beijing 1727 
 
¶1. (SBU) Summary: Although China has eliminated 
widespread hunger and malnutrition within its 
borders, Beijing still faces challenges in ensuring 
predictable, affordable domestic food supplies, 
including: land and water constraints, ecological 
problems, trade barriers, a poor regulatory and 
investment climate, and misconceptions regarding the 
causes of global food price spikes and shortages. 
China is currently addressing its food security 
concerns by focusing on domestic agricultural 
production aimed at maintaining food self- 
sufficiency. 
 
Comment: China would mostly likely welcome APEC food 
security discussions on topics -- such as 
environmental degradation, climate change, and 
biotechnology -- that match China's emphasis on 
supporting domestic food production.  China also 
could benefit from conversations on how to achieve 
food security thorough a shift to greater reliance 
on agricultural trade, appropriate resource pricing 
and commodity markets, as well as investment climate 
and regulatory reforms.  Chinese officials have 
stated that China, as a "developing country," is not 
interested in contributing financially to non-United 
Nations multilateral food security initiatives, but 
might be willing to make some bilateral commitments 
within the APEC context.  End Comment and Summary. 
 
¶2. (U) This cable provides information in response 
to Ref A and is a follow up to Ref B. 
 
--------------------------------------------- ----- 
Focus on Self-sufficiency and Increasing Production 
to Address Food Security 
--------------------------------------------- ----- 
 
¶3. (SBU) China has mostly eliminated systemic 
malnutrition following farm reforms introduced in 
the mid-1980s.  Grain production typically exceeds 
domestic needs and China has been a net grain 
exporter for more than 20 years.  Ensuring food 
security through self-sufficiency -- especially in 
grains including corn -- remains a key feature of 
Chinese Government policy and planning, considered 
essential for continued social stability.  This 
focus was underscored in July 2008 when China 
updated its food security goals in its Medium and 
Long Term Plan for National Grain Security.  The 
Plan stated that China's grain supply should 
continue to rely on domestic production and set a 
grain and oilseeds self-sufficiency target of 95 
percent or above (Ref C). 
 
¶4. (SBU) China's approach to food self-sufficiency 
relies heavily on farmers' ability to produce rising 
quantities of food from less land at low prices.  To 
encourage grain production and maintain profit 
margins for grain farmers, in recent years China has 
eliminated taxes on agricultural land, increased 
both direct payments and minimum farm prices, and 
provided subsidies for inputs such as farm machinery, 
fuel, seeds and fertilizers.  In 2008, direct 
payments to grain farmers and input subsidies 
reached an estimated $15.1 billion (RMB 102.86 
billion), nearly double levels from the previous 
year.  In an effort toward boosting output per 
hectare, the leadership recently approved a $3 
billion biotech research and development program 
designed to expedite market introduction of higher 
yielding/resource efficient grain varieties.  Many 
observers expect China's first biotech grain 
varieties could be commercialized within the next 
 
BEIJING 00002744  002 OF 003 
 
 
few years. 
 
--------------------------------------------- -- 
Challenges to Self-Sufficiency, and Rising Trade 
--------------------------------------------- -- 
 
¶5. (SBU) Competition for natural resources from 
residential and commercial users poses significant 
challenges to China meeting its long-term self- 
sufficiency goals.  Arable land in China continues 
to shrink, falling to just over 120 million hectares 
in 2008 from nearly 130 million hectares in the late 
1990s.  Water supplies are also dwindling, 
especially in the North, a major production area for 
wheat and corn.  Climate change, unsustainable 
agricultural practices, deforestation, and 
mismanagement of water resources have caused more 
than 2.6 million square kilometers -- around 27 
percent of the country -- to suffer from land 
degradation. (Ref D). 
 
¶6. (SBU) Market mechanisms and the private sector 
clearly are playing an increasing role in developing 
China's agriculture sector and meeting its food 
security goals.  International trading firms have 
entered the feed sectors, importing soybeans for 
example, and major international food companies are 
active in China.  However, China remains cautious 
about allowing market mechanisms and foreign capital 
an increasing role in food and others sectors seen 
as key to social and economic stability.  With food 
items the second largest part of the Chinese CPI 
after housing, authorities are also wary of the 
vagaries of global commodity markets.  State trading 
enterprises or quasi-government organizations still 
dominate soy bean and other sectors. 
 
--------------------------------------------- - 
Comment: Encouraging China to Embrace Markets and 
Reform to Achieve Domestic Food Security 
--------------------------------------------- - 
 
¶7. (SBU) APEC food security discussions could 
fruitfully address environmental degradation, 
climate change, and biotechnology as areas of 
cooperation that match China's current food security 
strategy.  APEC could also engage with China on 
topics that move beyond its current reliance on 
self-sufficiency, including agricultural trade, 
resource pricing and commodity markets, as well as 
investment climate and regulatory reforms.  Engaging 
China in discussions on these issues would help 
China more effectively and efficiently promote its 
long-term food security while also achieving its 
broader market reform and economic growth goals. 
Working to move China towards accepting that free 
trade could play a key role in achieving food 
security will also help progress in the Doha round. 
 
¶8. (SBU) These discussions would complement ongoing 
Mission China efforts to address specific market 
liberalization and market access issues for 
agricultural products in fora such as the Joint 
Committee on Commerce and Trade (JCCT)and the U.S.- 
China Joint Committee on Cooperation in Agriculture 
(JCCA).  APEC engagement could also help promote 
related discussion in bilateral dialogues such as 
the U.S.-China Strategic & Economic Dialogue. 
 
--------------------------------------------- --- 
Comment, cont'd: Partnering with China on Global 
Food Security Initiatives 
--------------------------------------------- --- 
 
¶9. (SBU) China has for several years been a 
contributor to the World Food Program and in recent 
years has been the world's third largest food donor. 
Although the bulk of China's food aid goes to North 
Korea, China recently contributed $5 million for WFP 
programs in Zimbabwe.  At a 2008 FAO ministerial, 
 
BEIJING 00002744  003 OF 003 
 
 
Chinese Premier Wen Jiabao announced a $30 million 
donation to the organization's world hunger campaign. 
China has endorsed the G8/G20 L'Aquila Joint 
Statement on Global Food Security. 
 
¶10. (SBU) Chinese officials, however, have so far 
has been cautious about making financial 
contributions to multilateral food initiatives not 
firmly under United Nations auspices (e.g., the 
L'Aquila Food Security Initiative), preferring 
instead to provide food assistance through United 
Nations and bilateral channels (Ref E).  While 
continuing to encourage China to more actively 
support multilateral initiatives, USAID is also 
encouraging China's contributions to initiatives 
such as the Comprehensive African Agriculture 
Development Program (CAADP), an African Union 
initiative under New Partnership for Africa's 
Development that allows bilateral contributions, 
which China may find more acceptable.  Beijing might 
be willing to make some bilateral commitments within 
the APEC context. 
 
HUNTSMAN