China’s Foreign Agriculture Investments

China’s outward investment strategy has attracted significant attention. China was the world’s second-leading foreign investor in 2014, and the country is projected to spend $1 to $2 trillion on outward foreign direct investment (FDI) during 2015-25 (Paulson, 2016; Rosen and Hanemann, 2012). China’s outbound FDI reflects a transition from “bringing in” capital and technology to a new stage where Chinese companies also “go out” or “go global” to play an active, assertive role in world affairs and the global economy (Shambaugh, 2013; Williamson and Raman, 2011).

China’s foreign investments have included hundreds of agriculture- and food-related ventures involving dozens of commodities on every continent. Observers and targets of these investments are often puzzled about the motivations and objectives and the level of government support received by Chinese investors. Chinese agricultural investments are alternately viewed as state-sponsored “land grabs” and as benign commercial transactions.

China’s agricultural investment initiative is an important development for U.S. farms, agribusiness, and policymakers since the United States is the leading supplier of China’s agricultural imports (Gale, Hansen, and Jewison, 2015). Will Chinese companies invest in U.S. farms and agribusinesses, or will investment be focused on other countries? Does this investment pose an opportunity or a threat for U.S. agricultural industries? Will Chinese investments affect U.S. policies and initiatives?

Chinese investments in foreign agriculture have prompted widespread attention and discussion in the news media, but literature on this growing trend is limited and provides only fragmentary information. Previous investigations (Brautigam and Zhang, 2009; Meyers and Jie, 2015; KPMG, 2015; Oliveira, 2015) found that international news media reports tend to overstate the extent of outward Chinese investment in agriculture and often mischaracterize its role. The Economist Intelligence Unit (2010) profiled mergers and acquisitions by Chinese companies but included no discussion of agriculture.1

Other authors have limited their analyses to aspects of the topic. Economy and Levi (2014) discussed China’s investment in resource-based industries. Brautigam and Tang (2009) and Brautigam and Zhang (2013) investigated China’s role in African agriculture; KPMG (2013) discussed investment in Australian agriculture; and Oliveira (2015) reported on Chinese investments in Brazilian agriculture. Gooch and Gale (2015) discussed some issues related to China’s rising overseas agricultural investment.

Since there are no comprehensive data or rigorous studies of China’s agricultural outbound investments, this report synthesizes various types of information to help readers understand and evaluate the Chinese investment program. Like Shambaugh’s (2013) overview of China’s “go global” strategy for international trade and governance, the current study investigates the strategic thinking of Chinese officials. Our study is based on a review of all available information sources in both English and Chinese to make a balanced assessment of China’s investment program. The study draws upon Chinese sources that are not accessible to the non-Chinese-reading public—Chinese Government surveys and reports, Chinese news media, policy documents, and compilations of investments for various countries and regions—to discern China’s strategic objectives and policy support for agricultural investment abroad. While it is difficult to draw strong conclusions about the impacts of Chinese agricultural investment, the report discusses some possible implications for U.S. agriculture.

The following sections provide detailed information on patterns of investment, China’s strategic thinking, and policy support for investments in agricultural and food sectors around the world. Further sections review the development of the investment strategy and its supporting policies and discuss commodity-targeting, regional patterns of investment, and merger and acquisition strategies.
1The Economist Intelligence Unit is a company engaged in market analysis and forecasting affiliated with The Economist magazine.

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