Record Soy Oil Exports Reveal China's Excess Soybean Supplies

China has flipped from net importer of soybean oil to net exporter for the first time ever, a phenomenon discovered by an analysis posted on a Chinese edible oils industry site earlier this month. Booming exports and plummeting imports of soy oil indicate the pace of soybean imports from Brazil is overwhelming demand in China and driving down prices of soy oil and meal. At the same time, accumulation of inventories and weak demand in China's food industry will help China sustain its strategy of zeroing out imports of U.S. soybeans to gain the upper hand in trade negotiations.

Chinese customs data through July 2025 confirm a prominent uptick in soybean oil exports mirrored by plummeting imports. The chart below shows soybean oil import and export volumes for the first 10 months of the 2024/25 market year compared to year-earlier volumes. (The market year runs from October through September.)

With just 2 months left in the 2024/25 market year, China's exports of soybean oil stand at 234,000 metric tons and its imports at 127,000 metric tons so far in 2024/25. This year's soybean oil imports are less than half the volume imported during the year-earlier period, and exports are up 170 percent. 

China's market year is October-September; data are available through July 2025.
Chart shows October-to-July imports and exports for MY 2023/24 and 2024/25.
Data from China customs administration.

An examination of USDA's PS&D database indicates that China's soybean oil exports are at a record high, and this is the first time China has ever been a net exporter of soybean oil. USDA estimates that China's imports and exports will each be 250,000 mt for 2024/25. Chinese customs data suggest the export number will hit that estimate for the full market year, but the import number is likely to fall short. Thus, China is likely to end up a net exporter for the full 2024/25 market year.

China has dozens of export markets for its soybean oil, but the largest increases in exports went to South Korea (up 30,300 mt), Hong Kong (up 29,000 mt), Malaysia (up 23,560 mt), and North Korea (up 16,670 mt).

The emergence of China as a net exporter of oil is mostly symbolic of market conditions in China. The export volumes are inconsequential. USDA estimates that China's consumption of soybean oil will hit 20 million metric tons in 2024/25, by far the largest in the world (By comparison, U.S. consumption is estimated at 12.178 mmt). Essentially all of China's soy oil production is derived from crushing imported soybeans to produce oil and soybean meal. 

The rise in soy oil exports suggests that the amount of oil produced from imported soybeans exceeds China's demand, resulting in low domestic prices that are competitive on the world market. Closure of many restaurants and workplace cafeterias and slow demand from food processors crimps demand for imported oil. The CASDE supply and demand report issued by China's agriculture ministry this month shows that domestic ex-factory prices of soybean oil in China is about 12 percent below the price of imported soybean oil during 2024/25; that margin was about 2 percent in 2023/24. 

A survey of China's Guangdong and Guangxi Provinces reported that inventories of Chinese soybean oil are also up. Downstream consumption was judged to be weak but could rebound when the school year starts. Inventories of soybean meal are also ample, with some processors running out of room.The report estimated that ample inventories and weak demand could help China get through the fourth quarter on Brazilian soybean supplies, but a significant shortage could occur by January.

Trade War Stimulates New Chinese "Land Grabs"

As trade tensions with the U.S. flare up, Chinese companies are setting up giant farms in Africa, Asia and Russia according to Chinese news media. The news echoes an earlier wave of so-called "land grabs" that were over-hyped and mostly ineffectual.

Earlier this month, a Beijing Times Caijing article, "Why are Chinese companies flocking overseas to farm?" explained that the phenomenon reflects China's strategic considerations for ensuring food security and its far-reaching intention to reconstruct international trade. The article connects the farming investments to trade frictions between the U.S. and China, the use of agricultural products as a bargaining chip in "geopolitical games," and the "huge risk" of relying on the U.S. and Brazil for 90% of its soybean imports.

An edible oils news site proclaimed that "a new wave of 'going global' in the agricultural and food sector has begun," with more and more companies investing in agriculture and food and participate in global food resource allocation."

A Chinese farm in Zambia in 2019. Source: Economic Observer.

Both articles featured a 100,000-hectare corn and soybean farming project in Angola with $250 million of investment planned by CITIC Construction after signing a memorandum of understanding with the Angolan Ministry of Agriculture and Forestry. CITIC will have a "secure stable supply" through long-term land lease agreements. The company pledged to establish a full agricultural value chain, including seed R&D, technology promotion, processing facilities and a logistics system. 

Angola's minister of agriculture and forestry said about 60% of soybeans and other ag products from the CITIC project will be exported to China. The rest will be consumed in Angola. According to the description, the project will help diversify China's overseas food sources and reduce Angola's dependence on food imports. 

During the same month, China Hydropower signed an agreement to obtain 30,000 hectares in eastern Angola with a 25-year tax concession to build logistics infrastructure and a seed research and testing center. This project is intended to attract other Chinese agricultural companies.

Business Times also pointed to Chaoliang Group's development of a 32,000 hectare project to grow soybeans in Tanzania.

Both articles also cited Wanlin Group's June 2025 agreement with Uzbekistan's agriculture minister to build a 10,000-hectare farming base that will produce vegetables and soybeans and process dehydrated and frozen vegetables in an Uzbekistan industrial park. 

These articles echo an earlier round of sensational announcements of giant overseas farming projects in the aftermath of the 2006-07 global food price spike. Business Times touted the superiority of the "Chinese model" over "Western" investments in Africa--citing application of modern technology, drip irrigation to conserve water, and inclusion of processing industry--but these sound a lot like an earlier generation of announcements that never were executed.

Back in 2010, the same edible oils news site reporting the new Angolan project trumpeted news that Chongqing Grain Group was buying 53,000 hectares of land to grow soybeans in Brazil with plans to reclaim an additional 67,000 hectares of uncultivated land and expand in Argentina. Another company, Zhejiang Fudi, gave Chongqing Grain Group 16,800 hectares of Brazilian land it had acquired in 2008. Chongqing Grain Group's chairman explained that the project was part of the company's plan to secure food supplies for the city of Chongqing, to go public, and to expand globally. The project never materialized and years later the land was still idle. By 2024, an article reviewing Chongqing Grain Group's escape from the brink of financial collapse observed that all its projects in Brazil and Argentina had failed, contributing to financial losses and heavy debt.

In 2011, Heilongjiang Beidahuang Nongken Co. announced it was negotiating an agreement with the Argentina Province of Rio Negro to cultivate 300,000 hectares of uncultivated land to grow grain, soybeans, vegetables and wine. The project was expected to include a hydro power plant and port logistics. This project languished after local opposition emerged based on environmental concerns. 

The latest round of projects may also be fake or doomed. The Chinese companies named in the articles are engaged in construction, dam-building, and textile manufacturing, and none appear to have experience in farming. Business Times hinted that CITIC Group is already encountering challenges obtaining rights to the land it wants to develop in Angola. Business Times also cited common problems that have undermined past Chinese farming projects such as weak local infrastructure, underdeveloped legal systems and insufficient supplies of skilled local labor. 

Business Times said geopolitical risks are the most prominent uncertainty. It's probably a coincidence that the announcement of the Angolan farming projects came at the same time rioting broke out in Angola in late July. The rioting was triggered by fuel prices but looting focused on Chinese businesses in Luanda's Chinatown. The Angolan riots are a reminder that China's giant farming projects are predominantly in unstable countries, a natural consequence of targeting countries with weak property rights and corrupt officials where it's relatively easy to acquire huge tracts of land. 

There are examples of smaller-scale Chinese farming projects in Africa, but the recent murder of one such farmer illustrates the risk of farming in Africa. On August 2, a 57-year-old Chinese woman operating a chicken and vegetable farm in Zambia was confirmed to have been murdered after having been kidnapped from her home in July. 

U.S.-China Soybean Drama Shaping Up

A U.S-China soybean drama is brewing as the peak season for shipping U.S. soybeans to China is just over the horizon with no sales of U.S. beans to China on the books. Soybeans--one of the top U.S. exports to China--have mostly been in the background of trade negotiations, but they got some publicity this month. President Trump called on China to "quadruple its soybean orders," and the American Soybean Association asked the President to prioritize soybeans in the negotiations to rescue farmers from a "trade and financial precipice."

U.S. soybean shipments to China occur predominantly during the months of October-December, immediately after the harvest. During the 2024/25 marketing year now finishing up, the United States exported about 16 million metric tons of soybeans to China during October-December, more than 70 percent of the year's exports to China and about 30 percent of the estimate of total soybean exports for the 2024/25 marketing year in USDA's latest WASDE report. The October-December exports to China comprise about 13 percent of all U.S. soybean use for the market year, again based on WASDE estimates.

The U.S. market year for soybeans is September-August.
Data from USDA GATS database.

Zero U.S. soybean sales to China have been booked as of late August, which appears to reflect a China-imposed embargo designed to put pressure on the U.S. in trade negotiations. The latest round of trade talks this month resulted in a 90-day extension of the deadline for a U.S.-China trade deal. The way things have been going, no deal is likely to be concluded until the deadline. That would be in November, missing the window for the peak export season. Thus, the U.S. industry could have zero sales to China through November and very possibly through December even if a deal is concluded. 

On the Chinese side, imports of Brazilian soybean imports are booming and Brazilian supplies have been creeping into the peak U.S. shipping season. In China's 2024/25 market year (which begins in October), China's soybean imports from the U.S. peaked during November-January (lagged a month from the peak U.S. export months), with about 12 mmt arriving over those 3 months combined. China imported from Brazil during the peak U.S. season, with 6 mmt of Brazilian beans arriving in October 2024, 4 mmt in November, and 3 mmt in December. After a brief lull in Brazilian soybean arrivals during February-March, imports from Brazil boomed to 10-to-12 mmt monthly during May-July and likely another 9 or 10 mmt monthly in August-September. Imports from other countries (Argentina, Uruguay, Canada, Ukraine, Russia and Ethiopia) combined for about 6 percent of China's soybean imports so far this market year.

The China market year for soybeans is October-September. No data for August-September.
Data from China customs administration. 

China effectively embargoed U.S. soybeans before during the 2018 trade war when China cut off nearly all U.S. soybean imports during September-December that year. Despite a modest boost in exports to other destinations U.S. soybean exports fell about 12.5 mmt in 2018/19. The U.S. soybean industry could see a similar drop in exports in 2025/26 if China repeats this embargo. (This outcome may not be reflected in WASDE's projected exports for 2025/26 since USDA does not account for future policies in its forecasts.)

The events shaping up are not a surprise to anyone in the soybean market. The average farm price for U.S. soybeans reported in WASDE is $10/bu for 2024/25, down from $12.40 in 2023/24. Both countries have been preparing since the 2018 trade war. China's "diversification" of imports has been a growing reliance on Brazilian beans over the past decade. The U.S. likewise pledged to diversify foreign markets for its soybean exports. More recently an initiative to promote use of renewable biodiesel fuel has boosted domestic use of U.S. soybeans. USDA projects domestic crush of U.S. soybeans at 69.1 mmt in 2025/26, up 12.2 mmt from the last trade war in 2018/19, picking up some of the slack left by China's shrinking purchases. However, exports to non-China markets appear to have slacked off since the last trade war. But exports of soybean meal have been on the rise.

Data from USDA PS&D and Global Agricultural Trade System.

Chinese leaders believe soybeans are one of their key points of leverage in the trade negotiations. The American Soybean Association's letter urging President Trump to prioritize soybeans in U.S.-China trade negotiations was featured in the English edition of China's nationalist Global Times and in an article posted on Chinese ag news sites. Chinese propagandists liked the American Soybean Association's warning that U.S. farmers "cannot survive a prolonged trade dispute."

It's unclear how long China can sustain an embargo on imports of U.S. beans. Reuters reported that Chinese buyers had booked 8 mmt of soybeans from South America for September and 4 mmt for October with more purchases due this month. If they repeat last year's purchases of Brazilian beans, an embargo on U.S. soybeans could still leave a 10-to-12 mmt hole in China's soybean supply. 

China may be able to muddle through if they have been stockpiling part of the surge of Brazilian soybeans imported since May. According to China Grain and Oil Market News, weekly crushing volume is 2.3-to-2.4 mmt per week (9-to-10 mmt per month)--a high volume for this time of year, probably reflecting the huge volume of Brazilian beans arriving. Soybean oil consumption is also record-high for this time of year but soy oil inventories have also grown to 1.14 mmt, the highest in 5 years according to Grain and Oil News. At present, the market is hoping for relief from low soy oil prices from a seasonal bump in demand during upcoming fall holidays.

China's soybean market has shown a tendency to gyrate between tight and loose market conditions. China clamped down on U.S. bean imports in March-April this year, resulting in a spike in soybean meal prices that was alleviated in May when Brazilian beans came to the rescue.

China may be short of rapeseed due to this year's announcement of high duties that are choking off imports Canadian canola seed, oil and meal. Chinese rapeseed oil prices are at a premium to soybean oil, likely stimulating demand for soybeans as a substitute for rapeseed/canola. 

China's hogs are the biggest consumers of soybean meal. In contrast to the 2018-19 trade war when an African swine fever epidemic shrank the swine herd by 125 million head, this year's swine herd is so large Chinese officials recently ordered producers to thin their herds and slim down their hogs. Poultry inventories are also at a high level. The low price of soybean meal is boosting its inclusion in feed, undermining a Ministry of Agriculture plan to substitute other protein meals and shift to low-protein diets as a strategy to reduce China's exposure to exactly the kind of crisis that is now looming. 

It's not clear who has the upper hand in the upcoming soybean drama, but it will probably be a sideshow with negotiations focused on EVs, steel, chips and rare earths. In the big picture of a $295.5 billion U.S. trade deficit with China last year, $12 billion of U.S. soybean exports will probably not get a lot of attention from negotiators.

Canola: China's Canadian Geopolitical Punching Bag

On August 12, China's Commerce Ministry determined that Canada was guilty of "dumping" canola seed and assessed punitive tariffs of 75.8 percent on Canadian canola seed. This is the latest example of Chinese authorities using canola as a geopolitical punching bag. They move their foot from accelerator to brake, allowing imports to curb rising prices before choking them off to punish Canada for lining up with the United States on bigger issues. The surge of imports and declining prices China's commerce ministry alleges to have "harmed" Chinese producers in 2023 was created by Chinese leaders themselves after they lifted a 3-year-old restriction on canola imports in order to curb spiraling prices.

Commerce Ministry officials claim that Canada's subsidies and preferential policies distorted supply and demand, created severe excess capacity, and harmed Chinese rapeseed producers and processors. The findings are the mirror image of justifications for curbing imports of China's EVs offered by Canada, the U.S. and EU--suggesting that the AD finding is a tit-for-tat measure meant to punish Canada.

The canola seed AD investigation had been announced in September 2024 and importers had been stockpiling imported canola seed in anticipation of the dumping finding, as reported here several months ago. China's 1.8 million metric tons of canola seed imports in the first 6 months of 2025 constituted 95 percent of all rapeseed imports this year (canola is a type of rapeseed).  The earlier post reported creeping expansion of soybean oil use as a substitute for rapeseed oil in rapeseed-producing regions of southwest China. Importers complained of difficulties obtaining supplies from Russia, China's number-2 supplier of imported rapeseed. That post calculated that China relies on imported seed and oil for about half of its supply of rapeseed oil. 

Canola has been a geopolitical football for many years. China's imports of canola were about 4.5 mmt in 2017 and 2018 before China banned two top canola trading companies in 2019. In 2020 China declined to renew an agreement that set a higher limit on foreign material in shipments. These actions were widely viewed as punishment for holding Chinese executive Meng Wanzhou under house arrest for violating sanctions on Iran.

Rapeseed prices surged in China and worldwide during 2022 after Russia invaded Ukraine (see chart below). Three months later China thought it was a good time to ease the restrictions on canola imports and allowed the banned traders to resume canola business. Later in 2022 imports of canola bounced back and remained at high volumes during 2023. The rebound in imports late in 2022 and 2023 eased upward pressure on Chinese rapeseed prices. 

The investigation period for the AD investigation was 2023. The surge of canola imports that year which the Commerce Ministry attributed to "dumping" was actually a return to normal trade triggered by China lifting its 3-year-old restrictions on imports. Chinese rapeseed prices stopped rising during the 2023 investigation period vis-a-vis the surge seen in 2022...but stopping the spiral of prices was likely the intended outcome of lifting its restrictions on canola imports. 

Canola imports from Canada reported by China customs data; monthly rapeseed price in rural markets from China National Bureau of Statistics. 

All commodity prices in China were under upward pressure during 2022, but they have been falling since 2023. Comparing domestic rapeseed prices with peanut prices--an oilseed widely grown in China that has minimal imports--shows that prices of both oilseeds were rising during 2022. The rebound of canola imports during the 2023 investigation period curbed the increase in rapeseed prices, but peanut prices kept rising until mid-2023. Both prices fell in 2024 as a broad deflation of commodity prices in China took hold. Rapeseed prices surged again in early 2025 as China indicated its intention to restrict imports of canola seed, oil and meal. Peanut prices kept falling in 2025.

Monthly prices in rural markets from China National Bureau of Statistics.

The claim of unfairly low Canadian prices is specious. The unit value of imported Russian rapeseed was less than the unit value of Canadian canola in 2023 and they were essentially equal in 2024-25. Both prices were consistently about one third lower than prices of Chinese domestic rapeseed. However, a description of the investigation said European Union price data was used to calculate dumping margins. (This may be intended to hit back at the Canadians for China's "nonmarket economy" designation that allows other countries to use price data from third countries in AD investigations of Chinese exports.) 

C&F unit values of imports @ border calculated from China customs data.
China farm price from average price in rural markets reported by China National Bureau of Statistics converted to U.S. dollars at the official exchange rate. 

The commerce ministry alleges "harm" to Chinese rapeseed producers, processors and service providers, but rapeseed has been a money-losing or marginally break-even crop in all but a few years since 2000. According to official agricultural cost of production surveys published annually by China's National Development and Reform Commission, rapeseed has been a loser for Chinese farmers every year since 2012. The survey data show the steepest loss (as a percent of production value) was in 2016, the year after China ended its support price for rapeseed. Rapeseed was close to break-even during 2022, but that was not a "normal" year. The loss grew to 10.2% of production value in 2023--the antidumping investigation period--but that year's loss was smaller than any losses reported during years 2012-2021. The data suggest that the only way for rapeseed to become profitable would be to maintain its domestic price about 40 percent above prices in exporting countries.

Compilation of data from China National Development and Reform Commission.
Profit/loss rate is percent of value of production. Most recent data are for 2023.

China's move to shut down imports of canola will restrict its supply of oilseeds and edible oil. According to one analysis of the dumping finding, the new tariff will raise the cost of imported canola slightly above the price of domestic rapeseed, making it uncompetitive. Imports for calendar year 2025 are expected to decline 12 percent from last year, likely resulting in tight supplies of rapeseed oil and higher prices in China. 

Chinese market observers note that rapeseed oil prices have already bumped upward this week. In the next few months--with China flooded with Brazilian soybeans--this will boost substitution of soybean oil for rapeseed oil even further. In Q4 2025 when Brazilian soybeans stop arriving, China could be short of oilseeds if there is no trade agreement with the U.S., China continues its embargo on U.S. soybean imports, and it maintains mega-tariffs on Canadian canola seed and oil.

Chinese Rural Families' Debt Anxiety Builds

China's rural families are sitting on a debt bomb, according to an article on potential risks of the rural family indebtedness problem published by Wuhan University Rural Governance Research Institute task force in 2023. The authors described how spillover of China's frothy real estate frenzy into the countryside drained the savings of two generations of rural families and saddled the younger generation with debts they will owe for 20 to 30 years. The Wuhan University authors say families that appear wealthy are living in dread of a job loss or sickness that could tip them over the edge into bankruptcy.

A 2022 article in Daily Economic News explained that a boom in demand for real estate in county-level towns was driven by reverse migration from big cities to rural hometowns, demand for better quality housing, and villagers commuting from small city apartments to factories or farms in their village. An article about a county town in Anhui Province traced a county real estate boom to a shantytown reconstruction linitiative aunched in 2018, pent-up demand for housing in small towns, and expansion by real estate developers.

According to the Wuhan University essay, it is common for rural parents to put their entire life savings into a down payment for an urban apartment for their adult children who are then committed to monthly payments that are often more than half of their incomes. Many aging parents continue working to help repay the mortgage, just barely making ends meet. Families with multiple jobs and residences were jokingly called "amphibians" swimming back and forth between their village house, their county town apartment, and work sites in big cities.

The Wuhan University authors warned that overextended rural families now face constant risk of financial disaster from job loss, sickness, or other unexpected events. As construction sites go idle, restaurants close, and factories go bust in China's flagging economy, job loss becomes a constant risk that could leave the family short of money to make mortgage payments. As parents reach advanced age, they are at risk of an illness or health crisis that could balloon family expenses and eliminate a parent's income from the family ledger. 

While these risks have always been present, the Wuhan University authors say rural families' ability to cope with risks has become increasingly fragile. They report that the younger generation of adult children have become accustomed to a more consumer-oriented lifestyle and often have automobile loans and online debts taken on to finance other purchases or travel as well as the mortgage. With income stretched thin to cover expenses, they have no financial cushion. An unexpected family event or job loss can leave them unable to make payments. Financial disaster could leave a black mark on their credit history, break down the ties of intergenerational cooperation, and disgrace them in the eyes of neighbors and peers. 

The rural real estate boom was short-lived. By 2022, Daily Economic News proclaimed a county town"anxiety disorder" for real estate developers as construction of units far outpaced demand and came to a halt as the economy stagnated. Some sales initiatives began to discount down payments or accept payments in pigs, wheat or garlic. Some local government officials were ordered to sell vacant units. A 2024 article said county real estate has no future as local governments and developers expanded construction despite declining county populations. Owners have given up trying to sell county city properties because they won't accept a market price that is just of fraction of what they paid.

The Wuhan University authors say rural family members are in a constant state of anxiety as they worry that financial disaster could happen at any time. They cite a rural resident who panics every month when it's time to withdraw money to make his loan payments. The authors point out that the heavy burden of uncertainty is not conducive to the "light heartedness" that can propel China's drive for "rural revitalization."

A social media ad said you could pay for a house with garlic in one Henan county.

While intergenerational pooling of finances helped families with low incomes buy expensive properties, the Wuhan authors warn that it is unsustainable. They reasoned that housing construction has peaked, since anyone born between 1950 and 1979 who can afford a house has already bought one. These houses will be inherited by their children born in later decades. Younger people would be unable to afford purchase of a home on a monthly salary of about RMB 4000 per month, so there are few new home buyers in the pipeline to propel demand. Hence, real estate will not be a major driver of China's economy in coming years.

In a county town studied in eastern China, the authors walked the streets at night and found all but a few homes were dark. (Daily Economic News reported a similar observation.) They estimated that the buildings already constructed could meet housing needs for the next 10-to-20 years in the town. The authors surmised that the prospects are even worse in county towns of central and western regions. 

The Wuhan University authors classify the state of rural families as: upper-income families are complacent; middle income families are falling into a debt trap; and low-income families are "lying flat" and giving up hope of a better life. The authors say lower-class families are "deeply resentful." In interviews, they throw up their hands in despair and complain, "With such high housing prices, low wages and high education costs, we can only live a life of idleness and wait for death." 

The authors also characterize the psychology of different generations: those born in the 1960s are "letting go," those born in the 1970s are "struggling," those born in the 1980s are "lying flat," and those born in the 1990s are "increasingly depressed."

The authors say financial catastrophe for rural families could reverberate by triggering loan defaults, exposing county-level banks to financial risks, and regional economic crisis. Nationally, the countryside no longer serves as a "shock absorber" for the economy. During the 2008 global financial crisis, for example, the authors say rural families had enough of a financial cushion that migrants who lost their jobs could move home to the village and take 6 or 8 months to get back into the workforce. Because family finances are so tight, surplus workers can no longer drop out of the labor force, return home to their villages, and wait out an economic downturn. 

Besides this article published on a site devoted to rural problems, there seems to be little discussion of the rural family debt issue. A study in a Chinese academic journal earlier this year contained mainly abstract statistical analysis with sanitized discussion that suggested findings similar to the Wuhan University essay's, that rural families with members migrating to work elsewhere are less vulnerable to financial stress, and many rely on borrowing from friends, family and informal lenders to repay rising debts. 

The deteriorating financial situation and psychological hopelessness described by the Wuhan University authors nevertheless seem consistent with observations of people sleeping on streets, rural banks halting withdrawals, and random attacks using knives and automobiles by frustrated Chinese citizens. Communist party leaders issued an order this year to prevent recurrence of poverty after having announced that  poverty was eliminated once and for all 5 years ago. 

The Wuhan authors warn that there is risk of social instability and a "more difficult-to-control situation." Such possibilities can not be mentioned in public since communist party leaders fear such unrest and constantly proclaim that the gap between urban and rural income is narrowing. 

African swine fever reported in Guangxi Province

China reported an outbreak of African swine fever in Guangxi Province, the first officially reported in 3 years. The outbreak sickened 215 pigs and killed 209 in 4 villages of Guangxi's Nopo County, a remote mountainous area bordering Vietnam. The 4 villages affected have a population of just 795 pigs. According to the report, authorities have taken the usual measures to control the disease by instituting quarantines, disinfecting premises, and taking other preventive measures. Authorities say the disease risk is under control. 

According to the announcement, distribution of live pigs is being tightly controlled in parts of the province. Controls were especially tight during June and July near Guangxi's port cities of Fangcheng and Qinzhou when pigs are likely to be imported from Vietnam.

Reuters reported last week that Vietnam has had 100,000 pigs infected with ASF in 972 outbreaks this year, up from 30,000 infections during the same period last year. 

This month's outbreak in Guangxi is the first officially reported by China since early 2022. This blog has reported intermittent private reports of ASF outbreaks despite the absence of official reports over the last 3 years. The most ASF cases ever reported by China were about 12,000 annually during 2018 and 2019, a tiny fraction of actual cases.

While this week's announcement implies that Nopo County's outbreak was transmitted from neighboring Vietnam and isolated there, reports of monitoring and controls suggest the possibility of a wider geographic spread in Guangxi. Nopo County is about 230 miles northwest of the ports of Qinzhou and Fangcheng. Wuzhou, a region where screening is underway for ASF, is about 450 miles east of Nopo County, and it borders the major hog producing regions of western Guangdong Province. Instructions to monitor imports of pigs from Vietnam suggest that the live pig trade is much larger than reported in China's customs data--which reports only a few hundred live swine imported annually. 

Last December China's agriculture ministry issued a sixth edition of its emergency plan for African swine fever control.

Official reports posted by China's agriculture ministry through June show no ASF outbreaks in either 2024 or 2025 and an increase in outbreaks of pediatric epidemic diarrhea and swine influenza in the first six months of 2025 versus the same period last year. The number of porcine reproductive and respiratory syndrome cases (PRRS) reported are down this year (there were large PRRS outbreaks reported in April and August 2024). A surge of 199 swine fever cases in the first six months of 2024 was down to 95 in the first six months of 2025.

A truckload of 10 hogs infected with foot and mouth disease was reported by a slaughterhouse in Nanning, capital city of Guangxi, in November 2024. 

Space Age Agriculture, Medieval Land System--A Dead End Alley?

China is pursuing an unworkable project of layering a space-age agricultural sector on top of a medieval collective land ownership system. Today, a dwindling cadre of aging villagers "own" the land, leasing it out on a short-term basis to a separate class of business entities that do the farming. Conflicting interests and uncertainty about the future breed a short-sighted approach to land management that undermines the long-term investments needed to put China's agriculture on an upward trajectory. 

This year's communist party "Document No. 1" on rural policy included a directive to upgrade the quality of arable land, apparently the inspiration for a law on protecting and improving arable land drafted and approved last month by China's State Council. The day after it was approved, an essay in State-run Economic Daily decried the unresolved degradation of farmland, including thinning and hardening of top soil, formation of gullies in the rich black soil region of the northeast, acidification in some regions, accumulation of salts in the soil elsewhere, and loss of organic matter. In a country where billions of dollars flow into giant pig and poultry farming companies, why is there no comparable investment in farmland? Will a law improve land quality if there is no incentive to invest in it?

China's "high standard farmland construction program" is the primary means of implementing the land quality law according to an explanation in State media. The program is universally hailed by propagandists as the centerpiece of China's food security policy, raising productivity and reducing vulnerability to drought and floods. It has been expanded over the years, including this year's goal to upgrade all "basic farmland" to "high standard" land by 2035. 

High standard farmland demonstration zone in Shandong Province. Source: Xinhua.

The success of the high standard farmland program is rarely questioned, yet there have been continual tweaks of the program to address mismanagement, substandard construction, corruption, underfunding, and incomplete or fraudulent projects as discussed in an earlier post. The solutions are always more government funding, stronger scrutiny of projects, threats of prosecution, and now "a stronger sense of responsibility" in the State media discussion of the new land quality law.

A few brave Chinese scholars in the hinterland have dared to investigate deep-seated conflicts inherent in the land system that undermine the high standard farmland scheme. They point out conflicts over the program's implementation that are largely kept hidden. 

China's rural land system was set up 2 generations ago when the countryside was teeming with peasants living off the land. All farmland surrounding a village is "owned" by a collective composed of families residing in the village. Land was divided up into hundreds of plots that are contracted out to be managed by each family for 30 years. Land was distributed on an egalitarian basis according to family size, number of laborers or other factors. Each family typically is given multiple plots of differing quality and accessibility, i.e. everyone got a strip of land in the most productive location and other plots in a swamp or on a hillside. A villager can lease out the rights to farm the land for a fixed term, but the land can only be permanently transferred by the village collective organization.

An article by professors at the China University of Geosciences pointed out that high standard field construction that flattens all the village's fields and installs drainage systems, irrigation pumps and pipes, electric wires, and roads inevitably disrupts long-established field boundaries that delineated the boundaries of villagers' land holdings. While it is now common practice to rent out the rights to manage the land--facilitated by separation of management rights from contracting and ownership rights--the authors reported that some villagers demand "unreasonable compensation" for losing control of specific plots of land. These disputes sometimes derail farmland construction projects. (The authors are vague about the concerns, but it seems that villagers may worry that they will lose their contracting rights to specific plots that are productive or easily accessible. Absentee villagers living in the city may worry that their neighbors will take the opportunity to grab the most productive plots.)

The Geosciences University authors reported that some projects are built with roads or irrigation canals that dead-end at the boundary of plots belonging to villagers who did not participate in the program. The authors observed that villagers' objections resulted in perpetuation of fragmented plots of land. In some cases, land was left abandoned. The authors asserted that these problems discourage many village collectives from taking on high standard farmland construction projects.  

The authors recommended arrangements undertaken by several model villages in Guangdong, Guangxi, and Anhui provinces where leaders encouraged consolidation of land plots. However, they fail to acknowledge the high costs of discussing and arranging such reallocations. While they claim the arrangements are voluntary, it sounds like some coercion is involved. 

High standard farmland construction involves earth moving equipment
that obliterates old field boundaries and creates new fields. Source: Xinhua.

The high costs of reallocating farmland, misaligned incentives and the government's fallback on coercive measures were themes of an article last month in a Chinese academic journal by Sichuan academy of social sciences scholars who took a more elegant and abstract approach to criticize the implementation of the high-standard farmland construction program. Warning that the program has reached a point where old problems fester as new ones arise, this article's authors argued that implementation of the program needs to consider root causes of disputes over property rights and misaligned incentives that impede the success of the farmland construction program and potentially harm farmers' interests. While China's collective land ownership system has evolved over the years to accommodate the outmigration of villagers and demands for scaled-up farming, the authors raised concerns that high transaction costs and misaligned incentives inherent in the system undermine private investment, perpetuate the fragmentation of farmland, and result in idle fields. 

These authors argue that high transaction costs prevent reallocation of land to the most efficient users, perpetuating fragmented property rights. A disconnect between managers and operators of land leads to short-sighted land use. Farmland becomes vulnerable to a "tragedy of the commons" phenomenon of stakeholders extracting benefits from land to maximize current returns, degrading its long-term productivity. The authors point out that the upcoming extension of rural land contracts for another 30-year period in 2027-28 overlaps with the high standard farmland construction plan and may solidify fragmentation of farmland plots. They argue that a "reasonable" allocation of property rights is necessary to prevent the overexploitation of farmland, but they offer few specifics of what should be done. 

Decisions about farmland have to be decided by village organizations.

The Sichuan authors noted that farmers, village collectives, local governments, and construction companies engaged in high standard farmland projects all have differing interests. They point out that the high-standard farmland program is a national food security program imposed from the top down by the central government. The central government requires that high standard farmland be operated by scaled-up farmers producing only grain, conflicting with villagers' interest in preserving their rights to farmland and maximizing its value. Local governments in farming regions responsible for implementing the programs are mostly short of money, have a narrow tax base, and do not benefit from grain output that generates no profits, tax revenue, or prestige. Central authorities have resorted to "responsibility systems", statistical quotas and threats of career derailment to force local officials to implement this program and other food security measures.

Construction companies have no interest in the long-term success of farmland construction projects, so the construction is often shoddy and substandard. The authors note that roads are often too narrow for agricultural machinery and cannot be widened due to poor planning. There is little coordination or information sharing between departments responsible for water, electricity, roads and internet access. The authors say difficulty of building irrigation facilities in hilly or mountainous areas remains a serious challenge (this became an issue when drought impacted wheat crops in the first half of 2025). There is little or no maintenance of facilities since responsibility for managing roads, electric lines, canals and pipes devolves to township governments who pass it down to village collectives. 

According to the Sichuan authors, officials envisioned private investment playing a major role in financing farmland construction, but government investment dominates. The authors point to a 2021-23 campaign in Inner Mongolia in which less than 5% of financing came from the private sector. During the 2016-20 five-year plan the central government sent down 300 billion yuan to support farmland construction. The latest solution is debt. The current push to construct high standard farmland relies on 125.4 billion yuan (about $16 billion) in special government bonds and much larger amounts of loans from State-owned banks. The authors note that Jiangxi Province issued about $3 billion of special bonds during 2021-23 for farmland construction and now faces the challenge of raising new funds while having difficulty repaying the existing debt. The government subsidizes most of the construction cost, but one-third must be financed locally--usually by local governments. The authors cited an audit showing 2,761 agricultural infrastructure projects with investment equal to nearly $1 billion were idle or unfinished in 2023. 

Given that farmers and local officials have little interest in investing in farmland officials have resorted to compulsion by passing a "law" requiring the improvement of farmland quality, as noted above. The article about the July 31 State Council farmland quality law included legalism--demanding "strict implementation of all regulations"--as well as a moral appeal--emphasizing the "need for a stronger sense of responsibility for protecting arable land."

Chinese officials envision high tech agriculture that can be run like a video game.
"High standard fields" are a first step in that direction. Source: Zhejiang Top Cloud Agricultural Technology Co.

As in most aspects of modern China, improvisation and constant tweaking of outdated institutions have created an inscrutable rat's nest of tangled interests in the countryside that is mostly invisible to the outside world. China aspires to be the leader of high-tech farming, yet its farmland is locked up in an outdated ownership and management system. The answers are always more science, more technology, more planning, without daring to look at the incentives that affect human behavior.

In assessing the big picture of China's agriculture, we are left with an enigma. Villages populated by a shrinking population of aging peasants squabbling over tiny plots of land are hard to reconcile with photos of neat green fields, reports of record harvests, the lowest grain prices in 5 years, and plunging grain imports over the past 12 months. China somehow is able to muddle through these problems...until they can't. 

But one might ask, how is it that billions of dollars flow into China's pig and poultry farming companies, feed mills and soybean crushing plants, while the country's farmland remains starved of investment?