Horse Piss Colonialism in China

You probably never thought about how China uses horse piss to keep its Central Asian colonies under control and to compete with giant multinational pharmaceutical companies.

A Kazak man collects horse urine.
Source: Tianshan Net (Xinjiang Daily)

Suppose you're an insecure East Asian country whose population mostly lives within 500 miles of the Pacific Ocean. To your west there's a big, mostly empty territory populated by nomadic ethnic groups. You're worried that powerful neighbors will gain control over this territory and end up right outside your back door. Plus the territory has land where you can grow crops, launch rockets, and extract minerals and petroleum. 

So you move into this area, subjugate it, and claim it as part of your country. You unimaginatively name it "New Territory" while claiming it has always been part of your country. You set up an archipelago of military farming and industrial settlements populated by your ethnic group. You don't want ethnic nomads roaming around freely, so you declare a grassland reform program that forces nomads to settle in towns or on ranches at a fixed location where they have to keep their livestock in barns. That way you can watch them and make sure they don't link up with their relatives on the other side of the border.

Turns out the nomads have no way of making a living in cities, have nothing to do, and they're becoming restive. So you order companies run by your ethnic group to scatter nickels and dimes over the colonies by buying raw materials from the natives. This is basically China's "precise poverty alleviation" program, and the trade in urine from pregnant horses is one of the more obscure examples. Other examples include tomato sauce, vegetables, apples, medicinal herbs, fish, and donkey skins.

Deep in the steppes of Central Asia there are ethnic Kazaks who once roamed the grasslands on horseback and ended up inside the border of the Peoples Republic of China, cut off from their cousins in Kazakhstan. About 20 years ago a program nominally to protect grasslands forced nomads to relocate to towns or settle at fixed sites with barns and fenced pastures for their animals. Studies by Chinese social scientists found that the grassland program left many ex-nomads in poverty and hinted that there was much opposition to the program.

Horses have always been a big part of their lives, so the communist Chinese rulers have come up with horse-related schemes to make money for the Kazaks. The Kazak prefecture is a top supplier of race horses all over China. Horse meat, intestines, horse fat, horse milk, cosmetics, and Chinese tourism to see the exotic grasslands and horse culture are part of the horse economy.

Horse with a urine bag strapped on.
Source: Xinjiang Morning News.

Another byproduct of horses is pregnant mares' urine known in polite company as "premarin" or PMU. The urine is rich in estrogen, other hormones and calcium that is used as raw material for medications used for hormone replacement and calcium supplements in older women. Xinjiang Xinziyuan Biopharmaceutical Co. in Xinyuan County buys the urine, extracts the estrogen and manufactures pills and creams that are sold all over China and Latin America. The company was founded in the 1990s by scientists from the Provincial medical university and seems to have ties to another company in Zhejiang Province on China's east coast.

According to Chinese propagandists, some Kazaks spend their winters collecting buckets of horse urine, and they are thrilled to get an extra $5 or so per bucket from selling the urine to the pharmaceutical company. The herders collect urine from pregnant mares by means of tubes affixed to their rear ends. A mare can produce about 5 kilograms of urine daily. According to Xinjiang Daily, in 2021 the price of mares' urine was 9 yuan (about $1.30) per kilogram, higher than the price of milk. 

The company says it purchased 1,500 tons of pregnant mare urine from Kazakh herders who had about 5,000 horses in Xinyuan County during 2021-22. They say this translates to income of 2000 yuan (about $300) per horse. Kazaks have about 10 horses on average.

Workers in the factory that processes the horse urine appear to be ethnic Chinese.
Source: Tianshan Net (Xinjiang Daily).

The method for creating estrogen medication from pregnant mare urine was developed in the 1940s by American company Wyeth, now owned by pharmaceutical giant Pfizer. The Xinjiang company--with 80 employees--is the only one selling such estrogen products in China and seems to have ambitions to compete with Pfizer. The Chinese company's scientists say they have developed a binding method that only releases estrogen when the woman's body needs it, thus avoiding harmful side effects of taking the hormones. 

In 2010 a delegation from China's State Council inspected the horse industry in Yili Prefecture and congratulated Xinjiang's agricultural university for horse-breeding success and for filling needs in the domestic market and "breaking the international monopoly" in mares' urine, milk, meat, and racehorses. The State Councilor promised to provide scientists in Xinjiang any support they needed.

In 2010 a State Council delegation inspected the breeding farm of an Yili Prefecture
race course and posed with Kazak jockeys. Source: Science and Technology Daily.

In 2014 Xinjiang announced that the Xinyuan County Pregnant Mare Urine export base was one of 6 model export bases certified by the region. The export base consisted of the Xinziyuan company and its urine collection network. According to the announcement, the mare urine project was a major science and technology project in China's 10th 5-year plan, received support from China's 863 S&T fund, and received several patents. The article pointed out that the company was the second in the world [presumably after Wyeth/Pfizer] to produce estrogen products from natural raw materials. After being certified as an export demonstration base, the Xinziyuan company was to receive special financial support of 1.46 yuan from the Xinjiang government. The company planned to use the funds to achieve certification to sell products in Europe. 

According to The Guardian, in the 1960s companies developed estrogen supplements made from soybeans and yams that have lower risk of breast cancer and blood clots than does premarin. Pfizer has a 3% market share in Britain; small companies are the main suppliers in Europe. The Guardian profiled a manufacturer in the Netherlands that uses soybeans from Heilongjiang--in northeastern China--as raw material to make estrogen.

In 2017, another delegation visited the mare urine company, an apple export base, and apparel manufacturing industrial parks in the Yili Kazak Prefecture to investigate why "Belt and Road" trade with Kazakhstan was not growing. (Problems included difficulty getting passports and signing contracts, barriers to financing and cross-border investment, risks of trade in Kazak and Russian currencies, and high taxes in Kazakhstan.) Two of the three local commerce officials the delegation met had Chinese names.

The urine-estrogen industry was not included in a new set of "agricultural international trade bases" announced during 2021-23. It's not clear that the company's products have ever been exported anywhere besides South America. 

Meanwhile horse owners in North America are unhappy that Pfizer has scaled back its purchases of their horses' urine--some blame it on Pfizer shifting its collection to China. Horse bloggers accuse the Chinese of abusing their mares. 

• Pfizer consigns PMU Premarin horses to killing fields of China | Wind Wild Horse

• Canadian PMU farms’ losses are China’s gain – Tuesday's Horse (wordpress.com)

Declining fertilizer use = shrinking cropland base?

Chinese data show a decline in chemical fertilizer that purportedly demonstrates their farmers are reversing their notoriously excessive fertilizer use. But what if the decline in fertilizer use actually reflects a decline in China's agricultural production?

China reported another record grain harvest last week for 2023, Many observers in China were skeptical about the data since the farmland base has been shrinking, there were floods and drought this year, and grain imports are up 7 percent so far in 2023. State media issued a rebuttal to these suspicions, insisting the data are correct.

Chinese statistics show a 17-percent decrease in use of chemical fertilizer use from 2015 to 2022, yet grain output has increased in all but one year during that time--more grain with less fertilizer. Hmm... 2015 was the year Chinese officials launched an action plan to cut annual growth in fertilizer use to zero by 2021. The statistics immediately began showing a decrease in fertilizer use!  

How can crop output go up with less fertilizer applied? Chinese officials claim their farmers have produced more grain with less fertilizer because fertilization has become more efficient, but there's no evidence on the ground of this improvement. 

Data from China's National Bureau of Statistics.

An annual farm cost of production survey conducted by China's National Development and Reform Commission (NDRC) reports no decrease in use of chemical fertilizer use. In fact, fertilizer use intensity has been rising since 2015 for some crops like cotton and wheat. This data is probably not manipulated since it is generally not seen by the public, and you have to look really hard to find the section of the survey with fertilizer use.

15 mu = 1 hectare. Data compiled from China National Development and
Reform Commission farm production cost surveys.

Compare the fertilizer use intensity calculated from two data sources. First, the aggregate amount of fertilizer use per hectare of area sown to crops. Second, a weighted average of the NDRC farm survey (each crop's average fertilizer use per hectare weighted by area sown to each crop).

In the chart below it is evident that the official fertilizer data (red line) is surprisingly smooth. Second, it's evident that the two estimates of fertilizer use were fairly close until 2015 when they diverged. The aggregate fertilizer use started dropping, while the estimate from surveys fluctuated around a near constant mean of 400 kg/ha.  

These statistics appear contradictory, but what if both statistics are actually accurate? What if per-hectare applications have been stable or increasing, and aggregate fertilizer use is dropping because the area sown to crops has been dropping--i.e. less fertilizer is used because less land is planted in crops? In other words, maybe it's the crop area data that is bogus. 

Another thing happened after 2015. China began to address a massive corn surplus by cutting the price support and then removing it altogether in 2016. After the price support was removed, Chinese corn prices dropped about 30%. The reduced profits were briefly said to discourage farmers from planting corn before this story was memory-holed. (Conversely, much of the run-up in area sown during 2010-15 was due to the profitability of corn, so it's plausible that the drop in corn prices reversed and wiped out those previous gains in area.) Chinese officials do seem panicked about declines in crop area over the last 3 years.

Data from China National Bureau of Statistics and calculations.

A thought experiment: Trial and error calculations indicate that it would have taken a 15% decrease in crop area to keep the ratio of fertilizer use per hectare roughly constant from 2015 to 2022--assuming the aggregate fertilizer use statistic is accurate. A decline in crop area of this magnitude seems too large, but China's growth in crop area data does not seem plausible.

Chart shows ratio of aggregate fertilizer use to sown area in crops. 

Ag Prices in China Declined During Fall Months

Falling agricultural prices suggest something happened to let the air out of China's economy in October. 

Weekly farm commodity procurement prices reported by the State Commodity Reserves Administration showed steep declines in corn and soybean prices during October; they seemed to stabilize in November. Rice prices increased and wheat prices were relatively steady.

Calculated from weekly procurement prices reported by
State Administration of Grain and Commodity Reserves 

Most agricultural raw material prices paid by enterprises peaked in September and fell at varying paces during October and November. 

Calculated from prices reported three times per month by China National Bureau of Statistics.

The two data sources agree that corn and soybean prices went down over the last three months and rice prices went up. Soybean meal had the steepest decline (-17.5%), followed by peanuts (-15.7%) and hogs (-13.2%).

Calculated from price indices shown above.

Monthly CPI reports indicate a downshift in prices in October-November. The food component of the CPI went up 0.2% in September, dropped 0.4% in October and dropped 0.6% in November. These indexes imply a 1% cumulative drop in food prices during October-November. Grain and fruit were the only food components of the CPI that went up over the last two months. The steepest declines over the last two months were for eggs (-6.2%), vegetables (-5.9%), pork (-4.9%), and aqua products (-3%).

Hog prices peaked first--in August--at 17.3 yuan per kg according to the NBS raw material price survey. During the 4 months that followed hog prices dropped 16% to 14.5 yuan per kg in late November despite October holidays and the approaching Lunar new year holiday, usually the peak consumption period. 

Average raw material prices paid by enterprises 3 times per month,
reported by China National Bureau of Statistics.

China's Plan for African Food Bowls

China's plan to modernize Africa's agriculture received much praise and fanfare at a China-Africa agricultural cooperation forum held in China's Hainan Island this week. 

The "Plan for China Supporting Africa’s Agricultural Modernization" (along with plans for the continent's industrialization and personnel training) was unveiled by Xi Jinping at the August BRICS forum in South Africa. The plan includes technology transfer by Chinese experts, building a China-Africa tropical agriculture R&D center, establishing a China-Africa R&D innovation alliance, training African technicians and managers, and promoting China-Africa trade in agricultural goods. 

China implies that its plan is superior to western approaches to aiding Africa. The plan's preamble announces that "China is ready to further explore new pathways of agricultural cooperation with Africa." China bills its plan as "south-south cooperation": one "developing country" helping other developing countries, but it also calls for marshalling international organizations to join the plan: the UN's Food and Agriculture Organization, the World Food Program, and International Fund for Agricultural Development and calls out several NGOs as potential partners. 

The Chinese plan includes approaches copy-and-pasted from its domestic agricultural development plans:

• "Food security" is one of the buzz words in the plan, including a goal of helping Africa achieve self-sufficiency in grains (sounds familiar). The objective of "stabilizing food bowls" in Africa evokes Xi Jinping's dogma of "keeping Chinese food bowls firmly in their own hands."
• The Chinese plan for Africa features a Chinese favorite: "demonstration projects" and "poverty-reduction villages"--highly subsidized Potemkin villages that impress visitors but could never be replicated without heavy subsidies.
• A featured technique being transferred to Africa is the lining of crop rows with plastic sheeting, a technique that has resulted in "white pollution" of frayed plastic blowing around rural China
• A liberal arts professor from China Agricultural University gushes about teaching a technique that alternates rows of corn and soybeans in fields. This technique is currently being tried out in China and requires expensive specialized equipment and big subsidies. It has not been proven successful in China.
• Big, shiny processing plants are constructed with subsidized loans, whether there is a market for the product or not, creating excess capacity and unserviceable debt.
• Agribusiness companies are induced to open operations in remote impoverished regions by cajoling and subsidizing them as a poverty reduction measure.
• Building up "industry chains", agro-industrial parks and value-added are being tried out in China now and are unproven strategies.

A "green channel" will be established to export African agricultural products to China (In China, this refers to waivers of highway tolls and stall fees in wholesale markets and expedited inspections). The plan calls for boosting China-Africa agricultural trade to $20 billion annually, establishing links between African free trade zones and Chinese bonded warehouses, and building cross-border warehouses to facilitate trade.

Group photo of the Second China-Africa Agricultural Cooperation forum
Source: China Ministry of Agriculture and Rural Affairs.

Vietnam has a vaccine; China doesn't

Vietnam has a vaccine for African swine fever (ASF). China does not. 

ASF is a virus that spreads quickly and causes hemorrhaging and death in most infected pigs. ASF first jumped from Europe to China in 2018. Then the virus jumped over the Chinese border to Vietnam within months after it had reached China. Swine herds were decimated in both countries. 

Scientists in Europe and elsewhere had been working on ASF vaccines for many years. Yet by early 2020--about 18 months after the country's first outbreaks--China's Harbin Veterinary Institute said it had developed a vaccine for ASF that was safe and effective. The vaccine was a live attenuated vaccine created by deleting genes from the virus. The Institute bragged on its web site: 

“The vaccine is currently the most promising vaccine for industrial application and will provide important technical means for the effective prevention and control of African Swine Fever in China and related countries.” 

Four months later, the Institute reported that the vaccine had been tested on 3,000 hogs with great success. We were told: "More testing is in progress and the institute plans to speed up research and development." The Ministry of Agriculture shortened the required testing period to expedite release of the vaccine.

The next news in early 2021 was that new variants of the ASF virus were spreading across China due to illegal use of unapproved vaccines, and the new variants were missing the same genes that had been deleted to produce the vaccine.

Then...crickets. No news of a commercial vaccine in China.

In July 2023 Vietnam approved two ASF vaccines for commercial use. The Vietnam Government said more than 650,000 doses of the vaccines had been tested on hog herds in 40 provinces, with an efficacy rate of 95%. Trials were suspended due to deaths of some inoculated swine, but they were restarted and completed. The Vietnamese vaccines were released for commercial use several months ago, and arrangements are being made to export them to the Philippines and Indonesia. 

It looks like Vietnam beat China in the race for an ASF vaccine.

China's Harbin Institute--surely embarrassed by this failure--has now fired up its publicity machine again. Deja vu in an October 2023 South China Morning Post article: "A promising new vaccine candidate has been developed by Chinese scientists to combat African swine fever." 

This announcement reported on experimental trials with two groups of 5 pigs each. Sounds like they started all over again, although the researcher said he began the work in 2018. This Chinese vaccine is probably still years away from commercial release.

How is it possible that Vietnam beat its huge northern neighbor? Vietnam collaborated with the USDA's Agricultural Research Service to produce the vaccines. Much of the basic R&D on the vaccines appears to have been done by USDA scientists. The vaccines can't be tested in the United States since there is no ASF in the U.S. Presumably, USDA chose to test the vaccines in a country where the virus was already present. (By developing a safe, effective vaccine, the United States will be ready if/when the virus does reach the U.S.)

China could have had the first ASF vaccine if its scientists and pharmaceutical companies had collaborated with the USDA scientists. But that scenario could never happen because the current Chinese leadership is so obsessed with beating the United States and becoming a "super power" that its scientists must duplicate and reinvent research being conducted in other countries...unless they can steal the technology or buy a company that has the knowhow. And researchers around the world also now know better than to bring their most advanced technology to China since it will inevitably be stolen. 

Thus, productivity lags behind in the world's biggest food producing and consuming country, and China's imports from the rest of the world soar. That's great for exporters but not the most efficient use of the world's soil, water, and grasslands.

Fear the invasive species

China's heightened concerns about invasive species are adding more red tape and record-keeping requirements to the import process. A new set of requirements for soybean shipments probably contributed to reported delays in customs clearance over the past 6 months. 

On July 22, 2023 China customs announced that each port of entry will conduct a 3-year campaign to crack down on invasive species in imported cargoes and smuggling. According to the announcement growth in international trade has resulted in a growing number of invasive species entering the country, presenting a growing risk. In the first half of 2023 authorities said they intercepted 599 species of nonnative animals and plants, including giant centipedes, savage harvest ants, and spotted salamanders, and "exotic pets" brought in by criminal gangs. Problems include illegal mailing of seeds, plants hidden in shipments of toys, and smuggled tiger bones. 

More than 20 years ago, scientists from China's Academy of Agricultural Sciences and Ministry of Environmental Protection wrote in the Chinese journal Diversity Science that "impacts of biological invasions are becoming more serious problems with rising trade, transportation, travel, and ecological tourism." The scientists noted that species could be brought in with good intentions--citing introduction of water hyacinth and alligator weed as pig feed--but later have disastrous consequences. They noted that introduction of weeds and pests lead to sustained use of pesticides and speculated that an alien species invasion could become a "big bomb" for Chinese agriculture.

According to a report this month on Fujian Province's work on a national survey of invasive species, "The diffusion pathways of invasive alien species are diverse and concealed, and most invasive species can find suitable living environments in the country."

In October 2020 China issued a "Biosecurity Law". State media explained that this law added so-called "national door" biosecurity to the growing list of national security concerns (e.g. food, energy, information security and social stability).

China's Ministries of Agriculture, Natural Resources, Environment, and the Administration of Customs are charged with implementing regulations on control of invasive species that took effect May 31, 2022.

In January 2023, those four Ministries issued a list of key invasive species that included 34 plants, 13 insects including the American white moth and leafminer, 4 plant pathogenic organisms, a nematode, 3 fish species, American bullfrogs, snapping turtles, and a red-eared turtle. 

This year a multi-year census of invasive species is being conducted. A series of meetings have been held around the country to raise awareness about the importance of preventing entry of particular pests and to discuss conduct of the invasive species census. 

Heightened attention to invasive species adds more layers of bureaucracy and inspection for exporters. In their explanation of the biosecurity law Customs officials explained they would implement 9 lines of biosecurity defense: tighten up quarantine access, conduct overseas pre-inspections, quarantine approvals, port inspections, laboratory testing, quarantine treatment, isolation and quarantine, limit imported materials to designated processing locations, and monitor epidemics. 

In early 2021 China's customs authorities began a video inspection campaign for foreign fruit suppliers and suspended access to China's market for 245 companies. 

In March 2023 customs authorities began a campaign to focus on imported soybeans as a potential vector for bringing invasive species into China. A detailed set of preventive measures have been adopted to inspect soybean shipments and track them as they move to storage and processing facilities inside China. Inspection and quarantine offices are instructed to develop annual inspection plans and check every importer annually or semi-annually. Inspections can be adjusted on the basis of a "risk analysis." 

Soybean imports must have a traceability and tracking plan that specifies the port of entry, dates and volumes of shipments, designated storage and processing facilities, and internal transportation plans.  Imported soybeans have to be stored in a facility surrounded by walls to ensure no contamination of surrounding from other storage and processing facilities. Companies must have the ability to purge invasive weeds or bacteria from shipments and burn or bury them. Transportation equipment has to be enclosed and measures must be taken to prevent leakage. Each shipment has to be tracked with an electronic form that passes from one customs office to the next as soybeans are transported to different locations. The form has to be sent back to the office at the point of entry for verification. Any company that fails to meet all the standards and procedures will lose their qualification to import soybeans.

Customs officials check a cargo of American soybeans for weed seeds and
other invasive species at a port in Liaoning Province during 2016.

Whose land? Whose corn? Chaos in Chinese fields

A video circulating in China last week may be the latest example of emboldened rural officials clearing aging villagers off collectively owned farmland. These enclosures with Chinese characteristics can be motivated by the need to increase productivity, lucrative opportunities to grow ornamental shrubs, or just plain corruption. The only power villagers have to assert their interests is their sheer numbers...and that's exactly what communist leaders are most afraid of.

The video appeared to show dozens of villagers stealing corn from a large field in Henan Province. A corn combine unable to complete its harvest sat idle as elderly villagers scooped up ears of corn into bags and loaded them into motorized carts parked in the field. Sirens sounded as police showed up but there were too many people to arrest. The operator of an idled corn combine unable to complete his harvesting work took a video of villagers fighting over a bag of corn in the field. While the videos circulating online were shot during the day, another video showed people in the fields at night gathering corn by flashlight. 

A literal "free-for-all" as villagers gathered corn
from a field in China's Henan Province.

No one seems to know what exactly was happening. Some accuse the people of stealing unharvested corn. Others say it was a common practice of gleaning leftover corn from fields that got out of control. 

Reports seem to agree that the field had been rented out to a company to grow corn.  county agriculture bureau issued a statement saying that a farming company that rented 400 mu (about 66 acres) had been able to complete the harvest of its corn after village officials had cleared people from the field. A netizen criticized the statement for trying to downplay the incident.

One source reported that village officials announced this year that farmers' land use rights would be contracted out to the farming company for 5 years with annual payments to villagers of 1000 yuan. Although participation was said to be voluntary, it was actually mandatory. After harvesting their winter wheat crop this summer, villagers had to turn over their land to the company to plant corn for fall harvest. Elderly farmers unable to work in cities had nothing else to do and came to the corn field to gather up as much grain as they could. It turned into a frenzy when so many people showed up.

An example of forced land transfer elsewhere in Henan was reported 2 years ago in an investigation of 'out of control' land transfer. In that case village committees gave farmers a verbal notice to give up their land, promised them rent and "grain for green" subsidies for planting landscaping trees, and gave them a blank agreement to sign. Many farmers were opposed but "ideological work" made them afraid to decline. Later, when villagers went to complain about rent not being paid they saw that the paper they had signed was a "forestry business contract" and the subsidies had been misappropriated by local officials. 

It's possible farmers in last week's video had been angered by a similar dispute. They may have been collecting the corn in lieu of unpaid rent or some other problem. 

The real explanation has not been revealed but the incident does reflect the chaos that can ensue when property rights are vaguely defined and officials with political power become the de facto owners. 

Brazilian Corn Pours into China; "Diversification" increases Dependence

Chinese State media celebrated growing purchases of Brazilian corn as a strategy for breaking the "dominant position" of U.S. corn in China's market. In an October 10 article, "China adjusts corn imports to shift toward Brazil, U.S. loses 'dominant position'," China's strongly nationalist Global Times said, "China is now carrying out corn import diversification to change the excessive reliance on the U.S. as a single supplier."

Citing Refinitiv data, Global Times was thrilled to report that August 2023 imports of U.S. corn were down 83% from a year earlier while corn imports from Brazil went from zero last August to 580,000 metric tons in August 2023. Moreover, Global Times reported that imports of Brazilian corn would rise to 1.22 million metric tons in September while imports of U.S. corn would drop to 70,000 metric tons.

China approved Brazilian corn for import late in 2022. Brazilian customs data show that 1 million tons a month were shipped last December and January. Brazil's new corn shipment campaign revved up again with 900,000 tons in July, 2.4 million tons in August and 3.5 million tons in September--shipments even bigger than those predicted by Global Times. 

Source: Brazil's customs data.

An article in Chinese news media last year implied that China had kept Brazil waiting for nearly a decade before fully consummating the deal. China had signed a protocol for Brazilian corn to enter China in March 2014, but it was never fully implemented because China had a huge glut of corn at the time and many GMO corn varieties grown in Brazil had not been approved. Only a few small test shipments of Brazilian corn reached China until 2022.

A surge of corn imports during 2012 first set off alarm bells in China because nearly all of it was supplied by the United States. Authorities thought that was the beginning of a corn import boom. They jumped into action by approving Ukraine and Brazil as additional corn suppliers. Also in 2012, a $3-billion loan was issued by the China export-import bank to fund agribusiness and infrastructure in Ukraine in 2012 to be repaid with grain shipments...so Ukraine's corn received full approval almost immediately. 

After Ukraine was approved, China suddenly began rejecting nearly every U.S. corn shipment during 2014/15, claiming to have found traces of an unapproved GMO corn variety. (Ukraine supposedly doesn't grow GMO corn.) Ukraine replaced the U.S. as China's sole supplier of corn for most of the next 6 years. Shipments were limited however due to China's worsening glut of corn that became evident in 2014. In 2016 China canceled the corn price support program that created the glut and sold off massive amounts of excess corn reserves during 2017-2020. 

Source: Analysis of China's customs data.

The United States came back into the picture in 2020/21 when China's excess corn reserves were depleted, Chinese corn prices spiked, and the Phase One trade deal committed China to import more U.S. farm products. This is when the U.S. (temporarily) gained the "dominant position" decried by Global Times. 

Then, in 2022, China's "friend without limits" invaded Ukraine, stole corn fields, destroyed warehouses and ports, and mined shipping lanes, severely disrupting Ukraine's corn shipments to China and elsewhere. China needed a new competitor for U.S. corn, so it finally opened its market to Brazil.

And it's probably entirely coincidental that China became very active in approving Brazilian corn and various other farm products for its market during 2022, just before Brazil became one of the first countries to pledge support for China's Qu Dongyu for re-election to a new term as the FAO's Director General in 2023. Two months after winning his new term in July, Qu took a trip to Brazil where he signed multiple agreements including a new research center on tropical crops. This couldn't possibly have been a reward for supporting Qu's candidacy.

While China claims to be diversifying its corn imports, the Brazilian corn pipeline will add to China's growing dependence on Brazil which is already a top supplier of China's imports of soybeans, cotton, beef, pork, and sugar. Brazil now supplies about 25% of China's agricultural imports, more than any other country. The U.S. share was 25% a decade ago but is now down to 16% so far in calendar year 2023. Other leading suppliers Thailand, Australia, and New Zealand supply about 5% each. 

*January-August 2023. Source: China's customs data.

Feed Mill Fined for Using GMO Corn

A feed mill in China's Guangdong Province has been fined by authorities for using unapproved genetically modified corn as raw material. Could this be a signal that Chinese officials are ready to crack down on corn imports?

The announcement was featured in news media as one of 10 "representative cases" of the Ministry of Agriculture and Rural Affairs' campaign to "stabilize grain production, protect supply." Authorities say traces of imported GMO corn were found in the company's processing equipment in a sample inspection for GMOs. The feed company had not obtained a license to process agricultural GMOs. The batch of illegally processed corn totaled 31.02 metric tons. The corn had already been processed, but final products had not been sold, according to the description of the case. The company was fined 101,000 yuan (less than $14,000) and products were destroyed.

Chinese agricultural authorities announce "representative cases" in GMO crackdowns about once a year, but it is unusual--perhaps unprecedented--to feature illegal use of GMO grain by a processor.

For example, early this year an announcement of representative cases of GMO violations from 2022 featured unapproved trials of GMO corn by two seed companies in a Hainan; GMO corn trials in Henan Province conducted by DBN Ag Technology Co. without obtaining a license from the county; traces of GMO corn were discovered in plots of summer corn trialed by Beijing Wannong Pioneer in Tianjin; and two shops were caught selling unlabeled GMO soybeans in Nanchang, Jiangxi Province.

The discovery of GMO corn in the Guangdong feed mill announced this week was actually made a year ago, on September 9, 2022. Why did it take a year to announce it? None of the other 9 "representative cases" were mentioned. Is this a signal from authorities that corn imports need to be cut back?

Chinese food safety news media fog: "borax pork" example

"'Borax pork' appears in the market again, serious investigation!" was the headline of a Guangzhou Daily article posted on many Chinese web sites earlier this month--including official Xinhua News. The article warned consumers that inspectors found that market vendors used borax to keep their pork moist and fresh-looking in a food market in south China. This appears to be a straightforward warning to consumers. But picking apart this "news" shows how authorities carefully control reporting of problems to manage public opinion and deflect blame for problems.

According to the "borax pork" warning, borax was discovered during a "surprise inspection" of two food market vendors selling meatballs and pork in Panyu--a manufacturing hub and satellite city of Guangzhou in south China. Inspectors seized a box of borax used by a vendor to clean pig intestines, and chemical testing detected borax in some samples of meat. The inspection was carried out jointly by market supervision officials and police. Panyu police are prosecuting those responsible and local authorities are cracking down on the use of additives and borax, the article said. 

[According to WebMD borax is a white powdery substance that combines boron, sodium and oxygen. It is commonly used as a household cleanser, a laundry detergent additive, and other uses. If ingested in large doses it can cause kidney problems. Borax is banned for use in food in both the U.S. and China.]

Staged photo of inspectors checking for borax-adulterated pork products in Panyu, China.

Why was the discovery of 2 samples of tainted meat in a single market in southern China considered to be important enough to circulate all over the Chinese internet? Was it, in fact, news?

Chinese propagandists appear to be salting news media with reports of "borax pork" to warn consumers of a widespread and chronic problem. They report what appear to be small, isolated incidents in southern factory towns to hide the scope of the problem. The articles sow suspicion of small vendors to drive food business to supermarket chains which authorities believe they can control more easily.

In August 2023, Hong Kong news media reported that borax-contaminated pork was discovered in Zhuhai, another city in Guangdong Province. Again, borax was discovered on pork from 3 vendors who had been turned over to police.

In June 2023, Shanghai publication The Paper had posted a lengthy article, "Borax pork appearing on the market--what is it?" reporting the story of retired "Uncle Zhao" who became suspicious of a pork vendor after reading an article online about borax-contaminated pork. The article noted that Chinese Central TV had once reported that borax was detected in pork sold by 3 vendors in Nanning City of Guangxi Province (2015 report preserved by bannedbook.org) and went on to explain why vendors treat their pork with borax, its dangers and how to watch out for it. Like the recent Guangzhou Daily article, The Paper article cited an example from Panyu, but it was a Panyu Daily article from 2015--8 years ago. 

Similar but different facts were reported in another 2015 Guangzhou Daily article which again gave 3 examples of pork vendors prosecuted for adding borax to pork. These vendors sold pork in Dongguan, another industrial satellite city of Guangzhou, and each was identified as coming from small cities and towns elsewhere in Guangdong Province.

Vendor accused of adulterating pork with borax in court, 2011

China's Baidu has an article on "borax pork" that posts a number of clips from news media outlets warning about "borax pork."

Another article circulated on Chinese web sites in June featured warnings from physicians that ingesting even one gram of borax used on pork could be toxic. 

In June 2023 inspectors in Taiwan's New Taipei City discovered 2 food samples adulterated with borax. They had discovered 1 adulterated sample in 2018.

In December 2022, a lengthy article issued by a Jiangsu Province news outlet warned consumers about the borax pork problem.

In 2020, Hong Kong media reported announcements that borax pork adulteration was discovered in Shanxi and Fujian Provinces.

Guangdong Province issued a warning about borax in pork as early as 2011, demonstrating that the problem has been around more than two decades. 

What we can discern from picking through these reports is that use of borax to clean up pork is pervasive in China and has been for 2 decades or more. Authorities want to warn consumers about the problem, but news media have been instructed to only report 2 or 3 isolated cases in far-away industrial towns to cover up the pervasiveness of the problem. The articles blame evil or ignorant vendors to deflect blame from government officials. No cases have been reported in retail chain food outlets which are favored by Chinese leaders.

A corollary is that monitoring news media reports in China is not an accurate means of monitoring what's actually going on. News media report only what the regime wants the public to know. These reports are reposted on social media, so monitoring social media results in the same outcome. Borax adulteration of meat occurs in China all the time, but news media handlers choose when to intermittently salt the media with reports to boost crackdown campaigns. 

A result of news media control is a fragmentation of the public into an ill-informed segment who accept the reports and another segment who distrust news media because they have discovered the manipulation. This leads to dysfunction and is not unique to China. The threat is present anywhere news media are controlled by an elite minority.

Disaster Spending Suggests Flood/Drought Damage

The billions of RMB paid out to mitigate flooding and drought in China--including directives to replant crops in September within a month or two of harvest--suggest substantial damage to grain crops. Yet, Chinese authorities are sure to announce another huge harvest this year. 

Funding of 732 million RMB was announced September 1, 2023 by the Ministry of Finance and Ministry of Agriculture and Rural Affairs for drought mitigation in Gansu and Shaanxi Province; recovery from typhoon damage to crops in Jilin and Heilongjiang Province; and control of rice pests and diseases in Jiangxi and Hunan Provinces. 

On August 25, the Gansu Provincial finance and agricultural departments issued 50 million RMB for emergency drought relief that paid for seeds, fertilizer, agricultural plastics and equipment to replant crops, and water engineering in the province.

On August 30, the Ministry of Agriculture and Rural Affairs held its videoconference to discuss use of agricultural machinery for disaster prevention and recovery. The annual "Three Autumn" mechanization work calls upon local officials to organize equipment and teams to harvest fall crops, plant over-wintering wheat and rapeseed crops, and to plow, level, drain fields and dig ditches. Officials in flood-impacted areas were ordered to use earth-moving equipment to rehabilitate fields as soon as floodwaters recede. Local authorities are expected to fund this initiative on their own. The program sets targets for the number of machines and strives to increase the mechanization rate. 

On July 31, The Ministries of Finance and Agriculture issued 432 million RMB to support saving or replanting of crops impacted by drought and floods in 8 provinces. 

On June 3, the Ministries of Finance and Agriculture announced emergency funds of 200 million RMB to expedite harvesting and drying of wheat in Henan Province after severe flooding waterlogged the crop.

In April, central authorities issued 1.6 billion RMB for the annual "one spray, three preventions" to treat the winter wheat crop with a combination of fungicides, insecticides, plant growth regulators, and fertilizers.

Also in April, authorities issued 10 billion RMB for a "one-time subsidy to grain farmers" to compensate farmers for rising input costs at spring planting time. Any farmer, cooperative, or enterprise that actually plants grain is eligible to receive this subsidy. 

Similar disaster funds were issued in 2022. The "one-time" subsidy is actually a "three-time" subsidy (and counting) since "one-time" subsidies were also given in 2021 (40 billion RMB) and 2022 (20 billion RMB). Each province pays this subsidy in different amounts based on the area of crops planted. The "one spray, three preventions" for spring wheat spraying has been paid routinely for many years. In August 2022 300 million RMB was distributed for recovery and replanting of crops impacted by drought, flooding and typhoons in 13 provinces. In June 2022, 673 million RMB was issued for control of rice and corn pests and locusts in 25 provinces. In 2022--during severe covid lockdowns--the "three Autumn" mechanization emphasized harvesting and planting of crops where farmers were unable to return to their hometowns and harvesting and drying crops from flooded fields. 

Teetering Population Pyramid in Rural China

China's countryside is gradually turning into a warehouse for the country's aging population and the working-age population shrinks. 

The "population pyramid" for China's countryside in 2020 has a hollowed-out base with relatively few people at peak working ages of 15-49. The largest cohort of rural people in 2020 were aged 50-54, with 24 million women and 25 million men in this age group. By contrast there were only 11 million males and 8 million females aged 15-19 in rural China during 2020. 

Calculated from China's 2020 population census.

Back in 2000, the rural population pyramid had a thicker base of working age people. Folks age 50-54 in 2020 (a baby boom born in the late '60s to make up for the starvation after Mao's "great leap forward") were aged 30-34--at peak working age. There were so many rural people at working age then that underemployment in the countryside was a major concern in the early 2000s. That cohort was also at peak child-bearing years in 2000, and they had produced a baby boom "echo" of kids aged 10-14 in 2000. In the late 1990s it was urgent to get into the WTO in order to jump start the economy and create jobs to absorb the huge rural population. On the supply side, the seemingly bottomless supply of young rural people looking for jobs was a major factor that powered the fantastic growth of the Chinese economy during the first decade of the 2000s.

Calculated from China's 2000 population census.

WTO accession succeeded in solving the rural underemployment crisis, but it hollowed out the rural population structure, leaving mainly old folks and children behind. 

Younger folks are more likely to migrate out of the countryside than are older folks. Thus, when children reach working ages they tend to disappear from the rural population.

The big cohort of rural kids in 2000 disappeared from the rural population as they reached peak working age. In 2000 there were 46 million rural boys aged 10-14 years old. By 2010, these boys were men aged 20-24, and only 28 million members of this cohort were still living in the countryside. By 2020, this cohort was aged 30-34, and only 19 million were still in the countryside. Thus, only 40 percent of the 10-14-year-old boys from 2020 were still in the countryside twenty years later. The rest either migrated to urban jobs (or were lost through statistical inflation/deflation.) The number of females in that cohort dropped from 43 million to 16 million, a 63-percent drop.

The chart follows the population of rural cohorts born during 1986-90 over China's censuses of 2000, 2010, and 2020. 

The consequence is the big hole in the rural population for folks at peak working ages in 2020. This is evident by overlaying the 2000 and 2020 population pyramids. The population of rural people at ages of 50 or more has grown from 157 million to 211 million over two decades while the population of working-age people ages 20-49 years old has fallen by half from 366 million to 181 million. The number of rural kids under age 20 has also plummeted from 261 million to 118 million.

The role of the countryside in the Chinese economy is now fundamentally changing. Traditionally, the countryside was a reservoir of labor that could be called forth to support booms and sent back to the countryside to return to subsistence farming during slow periods. Rural people were expected to farm and feed themselves with a small surplus to feed city people. Now the countryside is turning into a giant home for the aged. According to the 2020 census, 121 million people ages 65 and older lived in China's countryside--46 percent of China's elderly population. 

China's cities have a lot of elderly people too, but the economic and fiscal divide between city and countryside presents a serious challenge for supporting the rural elderly. Many of the elderly still engage in subsistence farming but this cannot provide a satisfactory standard of living. Chinese agricultural leaders are desperate to mechanize and scale up farming as they watch the agricultural labor force age and shrink. Their vision is for aging subsistence farmers to become surreptitiously shoved off the land by making them shareholders in phony farm cooperatives that often generate little or no dividends.

It's going to get worse. Note that rural China had 35 million 10-to-14-year-olds in 2020, down from nearly 90 million in 2000. Most of those 35 million 10-14-year-olds will disappear from the rural population over the next two decades.

China's leaders have long relied on Confucian respect for the elderly and family ties to motivate working-age migrants to send remittances to their aged parents in villages on their own initiative. What happens when the informal remittance system breaks down as migrants become more accustomed to city life where citizens are told to rely on the government for support? It also breaks down when migrants lose their jobs, face astronomical living costs and school fees, or lose savings in real estate crashes and financial meltdowns. 

A rudimentary old age and health insurance system has been set up in the countryside but the payments are much too small to provide a decent standard of living. Most of China's financial assets are in cities and there is no functioning mechanism to transfer funds to aging rural people. Rural government have no tax base to support rural elderly. Taxes on farmers were eliminated in the 2000s and now rural governments are responsible for handing out a growing menu of subsidies. They relied on selling off land for development projects to generate revenue but that golden goose has stopped laying eggs. Xi Jinping advocates creating agricultural industrial chains to bring prosperity to the countryside, but the dirty secret is that most of the value added in agricultural industrial chains is created in cities. Agricultural processing is a highly capital intensive industry that creates few jobs. 

Don't Worry about Food Imports (unless we tell you to)

"There's no need to worry about the increase in imported agricultural products," Chinese State media said earlier this month. The Economic Daily article assured readers that "the expansion of agricultural imports is not a bad thing in itself." It needs to be analyzed, authors said. 

This endorsement of food imports by the Communist Party-run Economic Daily appears to be an Orwellian reversal of food security propaganda. It was posted on dozens of Chinese web sites, a sure sign that it is official Chinese communist party propaganda, not the product of a rogue commentator. 

Economic Daily authors said that "some people" have baseless worries that "China will be controlled by others if it imports food" and that "foreign low-priced agricultural products will impact the domestic industry." To prove their point, Economic Daily authors pointed out that "these situations have never occurred in over 20 years since entering the WTO." They noted that imports are still a very small portion of China's grain supply and assured readers that the State pays great attention to stabilizing the market and protecting farmers' interests. Economic Daily also insisted that imports of ag commodities have not prevented the development of China's food grain and the country must be prepared to compete in international agricultural markets--rhetoric that has never appeared in China food security articles.

Less than 3 months earlier Economic Daily itself was among the "some people" peddling these worries. Two of the phrases they now dismiss appeared in a May 17, 2023 Economic Daily article, "Effectively maintain the security of the food industry" which warned that "[China] could easily be controlled by others" [italics added] if it continues relying on imports of grains. The May article also warned that low-priced imports could pressure the domestic grain market, weaken farmers' production incentives, and shake grain industry security."

The August article also appears to undermine a rhetorical underpinning of Xi Jinping's food security dogma. A similar phrase warning about "being controlled by others" has been quoted dozens of times to explain Xi's food security directive to "keep China's food bowl firmly in our own hands at all times":

"If [supplies of] staple food rely on imports, other people could lead us around by the nose" (如果口粮依赖进口，我们就会被别人牵着鼻子走). 

This phrase was featured in a 2021 article on Xi Jinping's "food security story," and it has appeared as recently as a March 2023 "Seeking Truth" article explaining Xi's food security mandate, in an April 2023 essay on becoming an agricultural powerhouse, and an article last month on the Ministry of Education web site. So Xi Jinping is among the "some people" who worry unnecessarily about food imports. 

Economic Daily cited Chinese customs data that said imports of agricultural products for the first half of 2023 totaled 855.5 billion yuan, up 16.2% from last year. Agricultural imports were more than twice as large as agricultural exports (328.5 billion yuan, up 8.9%) in the first half of 2023. Economic Daily described the faster growth of agricultural imports compared with exports as "a major feature of agricultural trade." 

China customs administration data for 2022--a year plagued by COVID lockdowns--reported agricultural imports for the whole year were valued at $220 billion, up 7.4 percent from 2021.

China's customs administration has now released data showing agricultural imports for January-July valued in Chinese yuan were up 12.8 percent from last year. Data reported in U.S. dollars are roughly the same as last year. (With the Chinese currency falling in value China now has to spend more domestic currency to buy the same amount of imports priced in dollars.) 

According to China customs, soybean imports in July 2023 reached 9.7 million metric tons, up 15% from last July. Soybean imports for the first 7 months of 2023 reached 62.3 million metric tons, up 15% from last year--despite hysterical rhetoric last year instructing farmers to grow more soybeans and claiming that feed mills are reducing soybean meal use in animal feed. China's meat imports for January-July 2023 totaled 4.1 million metric tons, up 9.5% from last year. Edible oil imports for January-July 2023 totaled 2.4 million metric tons, up 119% from last year. Imports of fruits and nuts--discretionary food items--were nearly 5 million metric tons, down 2%.

Economic Daily pointed out that China's status as the largest agricultural importing country means that China is playing an important role in international agricultural markets. Economic Daily explained that moderate imports of grain are part of the national food security policy and that imports of resource-intensive products allow China to conserve land and meet peoples' needs for a good life. 

Economic Daily saves the warnings about dangers of importing food for the end of the article, warning that China's imports are supplied by just a few countries and a handful of multinational grain traders, and the external environment is becoming more and more complex with the exports of some countries facing uncertainties. In extreme cases, the problem of "not being able to buy" must also be considered, the Economic Daily authors warned.

Why the sudden endorsement of food imports? 

Officials may see signs of collapsing food production they're not revealing to the public. This year officials suddenly became much more aggressive in ordering farmers and rural officials to plow up orchards, parks, and mountainsides to plant grain crops; sending out a cadre of rural enforcement teams to make sure the job got done; and arresting grain officials who looted grain reserves. Perhaps now officials have realized the strategy is not going to solve the food problem this year, especially after flooding destroyed an unknown portion of this summer's wheat harvest and flooding from this month's typhoons is damaging fall crops. Seeing a mounting shortage of food this year, officials may have changed course to soften up their rhetoric and get the population used to imports. 

Softening the rhetoric on food imports may be an attempt to head off criticism for failing to keep promises to guarantee the food supply. Officials may see that they are on the brink of losing public support given the flagging economy, alarming statistics on plummeting fertility rates, a youth unemployment crisis and looming financial meltdown. They are likely fearful of the common people pointing to surging food imports as a sign that the regime has lost the "mandate of heaven."

Deflation in China's Agricultural Prices

There's much chatter about China falling into deflation after its July 2023 CPI report showed a -0.3 percent year-on-year decline. The food and beverage component of CPI showed a -0.5 percent year-on-year decrease that reflected mainly a crash in meat prices--especially a 26 percent decrease in pork prices from a year ago. Meanwhile, China's Q2 2023 index of farm prices (most recent available) showed a tiny -0.4 percent decrease from last year.

Looking at prices of individual commodities from China's grain bureau, ag ministry, and rural market prices shows a falling trend or plateau for many commodities that began early in 2023 as the post-COVID-lockdown recovery narrative began to vaporize. Signs of deflation are surprisingly evident in Chinese ag prices, despite farmers abandoning land, floods, and downward pressure from surging imports. 

Chinese soybeans are a clear example. Xi Jinping ordered an increase in soybean production last year to reduce reliance on imported beans as a major national security initiative. Statisticians reported a record 20-million-ton harvest, but it glutted the market. Average soybean procurement prices reported by China's Administration of Grain and Commodity Reserves were strong until September 2023 when the new Chinese harvest came online. Then prices immediately began to plummet, an the slide continued throughout the marketing year except for a brief bump in March-April when purchases for reserves briefly elevated prices. The July 2023 domestic Chinese soybean procurement price was down 15 percent from a year earlier. These prices tell a more pessimistic story than China's official farm price index which showed a small 2-percent decrease in soybean prices as of Q2 2023. Meanwhile, China's soybean imports are up 15 percent so far this year, with 9.7 million tons imported in July 2023 alone.

Chinese corn prices rose after the 2022 Russia invasion of Ukraine and increased some more in the first months after the 2022 harvest until reaching a peak in December 2022. Then weakness set in for Chinese corn prices in December. Chinese corn prices softened during 2023 and are now very close to their year-earlier level.  

Chinese wheat prices also showed a clear bump in 2022 after the invasion of Ukraine. Like corn prices, wheat prices began dropping early in 2023. The fall in wheat prices ended abruptly in May 2023 as heavy rains damaged the new winter wheat crop in some key production areas of China. The rebound in wheat prices over the summer has been barely perceptible. July 2023 wheat prices were down 8.5 percent from year-earlier levels.

Chinese hog prices were on the way up a year ago, but they peaked in October 2022 and fell sharply late in the year as a surplus of hogs was dumped into a weaker-than-expected market. Prices deteriorated further in 2023. July hog prices were down 32 percent from a year earlier.

China's beef prices peaked in January 2023 and fell at an accelerating rate from January to July. July wholesale beef prices were down 6.7 percent from a year earlier. 

China's raw milk prices have also been in freefall during 2023. July raw milk prices were down 8.8 percent from a year earlier.

Fish also shows some weakness. Grass carp prices in rural markets fell sharply early in 2023 before rebounding slightly by July. The July 2023 grass carp price was down 5.5 percent from a year earlier. 

Rice is an exception, with prices up slightly from a year earlier. Long grain prices are mostly flat, despite all the turbulence in the global market. Medium grain prices have turned up very slightly with the most recent flooding having hit rice-producing areas in the northeast.

This is not an exhaustive analysis of agricultural prices in China, but it's enough to demonstrate that downward pressure from weak demand is evident in this sector of China's sputtering economy.