Will Africa Feed China?
Table of Contents
Many states, unions, and international organizations devote much time and efforts to the theme of Africa. It is both dynamic and underdeveloped region at the same time. Many countries of Africa have failed to demonstrate gradual development for many decades. In some parts of the continent, population often suffers from poverty, famine, and diseases. The political instability and continuous wars have made the existence of many Africans extremely difficult. However, China has recently begun to allocate monetary resources to the poor regions of Africa, paying more attention to the advancements in agriculture. The main reasons to invest in African agribusiness include considerable agricultural potential of the continent, which can ensure China food security. China’s experience of attracting foreign investment and its economic diplomacy shape this policy.
Why Is China Investing in Agriculture in Africa?
The main reason why the African continent attracts Chinese investments is its vast agricultural potential. In fact, Africa has one of the largest areas of arable land in the world. The World Bank study in 2009 revealed that the continent had 60 percent of the world’s currently uncultivated land that could offer immense benefits. The total square of this land stock is about 400 million hectares (p. 30). However, having such opportunities for agriculture development, the African countries are forced to import basic commodities to supply their population. Moreover, 33 million smallholder farmers are not able to grow enough food even for themselves (p. 30). Such low production results from the old-fashioned and ineffective technology of land cultivating. The Africans lack experience and opportunities to use animals or machinery in farming. Manual labor comprises nearly 65 percent of all operations connected with land cultivating, growing, and harvesting (p. 27). In the context of prospects for commercial agriculture, Africa can be compared to the sleeping giant. Surprisingly, t has not yet witnessed the achievements of the agricultural revolution that took place in Europe in the 18th century. The modernization can reduce poverty and increase rural development. However, to provide agricultural growth, Africa needs investment. For that reason, the countries of the African region are highly interested in foreign assistance to their economic development.
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Another important reason for the large-scale investing in Africa is China’s insistence to ensure food security. China’s population has severely suffered from the famines throughout the history. As a result, the issue of food security in the country with high population density is considered critical to the Chinese ruling elites. According to the data of Food and Agriculture Organization, by 2002, the value of China’s agricultural exports was estimated to be $63.2 billion, whereas imports yielded about $112.4 billion. Moreover, experts predict the growth of China’s food imports demand in future. The stabilization of the import volume will supposedly commence only in the beginning of the 2030s (p. 24). Thus, the rise in world prices for food, China’s prosperity, and shortage of the land suitable for agricultural use made the country invest in Africa. Some companies view the investments as the way to ensure support from the foreign economic cooperation funds that are under the management of the province. Furthermore, extending its influence in Africa, Beijing considers an important part of the state strategy to become a global player in the world. Obviously, the main tool for achieving such goals in Africa is the large-scale investment. The African countries are also a big market for the sale of cheap Chinese products.
How Are Chinese Investments Shaped by Factors Inside China?
One of the factors which shape China’s investments is its own history of attracting and receiving financial support from abroad. Nearly forty years ago, similar to the current situation in Africa, China experienced foreign investment in agriculture that contributed to the country’s development. The leading foreign organizations provided financial aid to facilitate China’s agriculture modernization, as well as human training opportunities. Like it is currently in Africa, foreign investors preferred contract farming in China. Therefore, the experience of China raised the similar expectations of engagement in the African countries and influenced the investments.
Another important factor that has an impact on China’s investments is stimulation and support of the efficient export of capital abroad at the level of country’s leadership. In the beginning of the 2000s, China started working in a new direction – going global in agriculture (p. 61). The China’s policymakers established that the Going Out Strategy should include overseas farming. The government and the president himself encouraged the Chinese companies to go abroad to cultivate foreign land, benefiting from forests and fish resources. As a result, the African farming sector became the main target of many leading Chinese companies.
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The Chinese government provided the wide incentive structure for the big companies to go global in agribusiness. Firstly, Ministry of Commerce and Ministry of Foreign Affairs published three catalogs to guide Chinese investors targeting abroad (p. 62). The catalogs included the lists of countries and branches of their economy which were ready to receive foreign investment and were of a great interest to China as well. For instance, in 2007, the officials defined the farming in 12 of the 33 African countries as preferable to Chinese investment (p. 63). Additionally, the companies which chose the target of investment from the catalog were able to enjoy government’s support in terms of financing, tax reduction, as well as more favorable customs and immigration regulations. The second vital step in globalizing agribusiness was an organization of the special financial funds to support the companies investing in foreign agriculture and other strategically important sectors. Such establishments began functioning at the national level and in the province. Since the beginning of fundraising, about $4.6 million have been spent to encourage the organizations to invest abroad (p. 63).
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The economic diplomacy of China also plays an essential role in shaping its investment overseas. The Ministry of Foreign Affairs organized “cooperation forums” in the zones with the great number of small countries, including Africa. The Forum on China Africa Cooperation commenced in 2000 (p. 63). The established forums offered China opportunities to advance economic connections and develop international partnership by giving aid, loans, and investment.
Another internal factor influencing Chinese investment is the strategic cooperation agreement between the Ministry of Agriculture and China Development Bank. The agreement was valid for five years and aimed at the modernization of China’s agricultural sector. One of the established directions was also enlarging China’s resources outside the country. Though most of the funds and projects were targeting at China’s agribusiness within the country, $420 million were directed abroad (p. 64). Moreover, the Chinese Enterprises Outbound Investment Conference took place every year to highlight the most important issues of China’s investment abroad.
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To conclude, the Chinese government formulated a long-term strategy of going global in agriculture. Giving financial support to Africa, the Chinese follow the patterns of investment experience that they themselves received from other countries. The Chinese government developed a system encouraging big companies to go overseas in order to extend country’s resources and influence. In this context, Africa became beneficial for China owing to its great agricultural potential. In spite of the famine in some regions and ineffective ways of farming, in the long run, African tropical soils together with the provision of modern processing methods will be able to feed the great part of the world’s population. However, the difficulties related to the African realities complicated the process of the agricultural development.