Thursday, December 18, 2014

China's "Farm Diplomacy"

Chinese President Xi Jinping always makes time for rural visits during his trips abroad. Premier Li Keqiang has been featuring agricultural investment and opening trade with new partners in his trips abroad. This is part of China's "farm diplomacy" which elevates agriculture to an important role in foreign policy.

A propaganda piece from the official Xinhua news agency reviewing Xi Jinping's Latin American visit during July 2014 introduced the "farm diplomacy" strategy. Chairman Xi has visited an Argentine ranch, brought seeds along on a visit to Fidel Castro's family hacienda, had coffee at a rural home in Costa Rice, visited a cattle farm in Australia, inspected a farm in Ireland, attended a tulip exhibition in the Netherlands, and drove a tractor in the United States. When he visited the United States as vice president he insisted on holding a meeting on agriculture in Iowa where he got reacquainted with a farm family he had previously visited in the 1980s.

Xinhua dubs this "farm diplomacy" (农庄外交) and asks, "With such a busy schedule, why does Xi Jinping always make room in his schedule for visits to the countryside?" 

First, Xinhua explains that Chairman Xi has a deep appreciation for the common people and the countryside as a result of his years in northern Shaanxi Province as a  young man. Second, Xi is "preoccupied" with how to improve the lives of rural people and develop the countryside. Says Xinhua, Xi has made agriculture a priority in each leadership position during his postings as municipal and provincial leader and now as China's new leader.

Xi has made agriculture an important part of China's foreign relations. Xinhua says all the countries Xi visits ask him to taste their food, hoping that China will import it. Agreements on agriculture are an important part of China's relations with other countries, says Xinhua. Since agriculture is a topic that all people can relate to, Xi's countryside visits build rapport with foreign hosts.

Xinhua lays it on thick with language that sounds like Mao-era propaganda:

"Land is the mother of all things, the source of hope, the root of friendship. Global thinking and love for the land is the commonality of many peoples, love of the land reflects our great national identity."

"The magical land brings forth the golden friendship between China and the world. The profound meaning of Xi Jinping’s 'farm diplomacy' is becoming a brilliant chapter in China’s diplomacy."

An August propaganda article endorsed outbound investment in agriculture by Chinese companies and reiterated Xi's agricultural priority in diplomacy. According to Farmers Daily Xi Jinping said, "Pushing forward ‘agricultural going out’ is beneficial for preserving national food security and it can serve the nation's diplomatic strategy.”

Establishing a more open economy was one of the general principles espoused in the 2013 "third plenum." The communist party's 2014 "number one document" on rural policies called for raising "the level and the quality of external openness in agriculture." Xi Jinping also endorsed a "new" food security strategy as top priority during 2014. The strategy acknowledges the inevitability of imports playing a significant role in China's food supply, and it advocates taking the initiative and gaining as much control over the flow of imports as possible. Auxiliary objectives are to increase the number of countries supplying imports (giving China more bargaining power) and for Chinese companies to control the entire supply chain for food imports (ensuring more profits flow to China and that Chinese companies dictate prices).

The Chinese strategy is to intertwine agricultural trade, Chinese investment, and diplomacy. China has a long history of using agricultural projects--mostly rice demonstration farms--as a diplomatic tool in Africa and Southeast Asia. Now China is dangling promises of agricultural trade and investment to achieve its food security goals and win new friends.

The strategy has been evident in outreach to Eastern Europe where Premier Li  has included agriculture alongside infrastructure and energy as targets for Chinese investment. In December 2013, Li struck an agreement to import cattle and pigs from Romania and signed an agreement for bilateral agricultural cooperation. A similar deal was reached with Serbia. China is holding an annual agricultural trade forum with central and eastern European countries.

This mixture of commercial and diplomatic objectives makes it hard to figure out just what China is up to. Many of these deals don't seem to have much potential impact on agricultural trade. For example, Romania is a net importer of pork, yet it is expected to supply China with 3 million pigs. One of China's objectives is to expand the number of suppliers for corn and other commodities. Peru was added to the short list of countries eligible to export corn to China, but its exports are inconsequential. According to customs statistics, China hasn't gotten that much corn from Ukraine and Bulgaria this year. Ukraine may default on 20 percent of its promised corn shipments to China this year. So, it seems likely that diplomatic objectives are behind many of these deals.

The "farm diplomacy" game may divide potential allies that might challenge Chinese agricultural support or protection policies. Agricultural trade baubles may influence free trade agreements or undermine coalitions that might challenge China at the WTO. The prominent role of investment may tie trade opportunities to a country's willingness to welcome Chinese agricultural investors. Entering the EU through the Bulgarian back door may open up other opportunities.

Xi does seem to have a genuine personal interest in agriculture. His dissertation for his doctorate in Marxist education at Tsinghua University was on agricultural marketing. (Whether he actually wrote it or not, he probably chose the topic.) His dissertation also featured an ambivalent approach to markets: use markets to distribute farm products but make sure the government has a firm grip on those markets. As President, Xi seems to be exercising a similar approach. While last year's "third plenum" called for the market to have a "decisive role," agricultural trade will increasingly be decided around government conference tables.

No comments: