The world’s top public spender on biotechnology research and largest importer of genetically modified crops, China gears up for a GMO era it sees as inevitable.
However, as the country navigates fierce international competition and public hostility at home, it is taking a cautious approach and hesitates to open up GM commercialisation and imports.
What next
Despite a strong will to promote biotechnology, China suffers from inconsistent policy support and diverging interests among policymakers. Since coming to power, President Xi Jinping has appeared increasingly committed to making China a GMO giant, but the technology has triggered a fierce debate at home, culminating with a domestic campaign opposing ChemChina’s purchase of Swiss pesticide and seed producer Syngenta, and Heilongjiang province’s decision to ban genetically modified crops. The government has chosen so far not to commercialise its GMO, focusing for the moment on research, promotion and strengthened supervision.
Impacts
- Commercial cultivation of pest-resistant GM corn varieties is a long-term goal, but unlikely within the next 3-4 years.
- Private firms and the government seek international cooperation and overseas development, but foreign companies should be wary of technology capture. China will strengthen supervision and control over domestic research and GMO imports.
- The outcome of the Syngenta deal and an ongoing turf war between northeastern provinces and the central government are two key unknowns to watch for in 2017.
Analysis
After a strongly promotional approach in the 1980s, then a more precautionary stance after the late 1990s, China now see the widespread adoption of GM food crops as inevitable in the long term.
Xi’s administration has strongly endorsed GMOs, starting a vocal pro-GMO public relations campaign in September 2014. Leading policymakers and scientists see in biotechnology a tool to increase the international competitiveness of Chinese agriculture, which is declining due to rising land and labour costs, resource shortages and environmental pollution (see Grain pricing).
Biotechnology was endorsed in August 2016 as a top priorities in the 13th Five-Year Plan for Science and Technology, pledging to push forward corn and soybean GM crops commercialisation by 2020.
Public hostility
Despite efforts to promote GMOs, the government faces rising public hostility. Food safety scandals have caused a trust deficit between the public and the state, reinforced by poor communication from the experts and the media.
Claims from a vocal minority of domestic critics and international activists have gained traction on social media, and opinion surveys reveal that a large majority of the population believe GMOs are harmful.
Even though the agriculture ministry, which plays the central role in the GMO regulatory process, is overwhelmingly pro-GMO, influential personalities in the military and in universities have warned against the risk of commercialising GMO staple crops.
In April 2016, 400 people, including a former minister for the chemical industry, Qin Zhongda, published a joint letter calling for a boycott of Chem-China’s merger with Syngenta, a leading global GM seed producer. The acquisition of the Swiss leading global GM seed producer would allow ChemChina to develop its GM business and further enhance China’s ability to guarantee food security, but the deal faces controversy, financing difficulties, and is still waiting for the European Union antitrust regulators’ green light.
Strengthening supervision
The agriculture ministry has recently voiced concerns over weak supervision after reports of Chinese farmers planting unapproved varieties of GM corn and rice.
The newly revised regulations governing biotechnology, released by the ministry in July 2016, toughen approval procedures and increase Chinese R&D units’s legal responsibility. MoA is also negotiating with State Council Legislative Affairs Office to implement a GMO labelling system aimed to improve monitoring.
Meanwhile, the agriculture ministry has increased crackdowns on illegal GMO testing and commercialisation, ramping up investigations, uprooting illegal GM corn crops and taking strict disciplinary measures against research centres circumventing supervision.
Commercialisation prospects
Public hostility is too strong for the government to back the commercialisation and planting of GMO crops. For the moment, its efforts focus on winning the ‘information war’, countering rumours and strengthening GMO regulations to avoid safety scandals.
Cultivation of GM staple varieties could be pushed forward in the next five years, Liao Xiyuan, head of the Department of Science, Technology and Education under the Ministry of Agriculture, revealed in April 2016, but the government is hesitant to engaging in GMOs as a food source for staple crops.
Today no genetically modified food (with the exception of a virus-resistant papaya) is grown in China, even for animal feed, and the government is holding back on approving new GMOs for food crops. Although GM rice developed in China has already undergone eleven years of safety evaluation and security certificates have been long approved for genetically modified cotton, corn and rice, commercialisation remains far off.
Turf wars
Local protectionism in the north-eastern provinces is a major opposition force to GMO planting and imports. New regulations issued by Heilongjiang province in December 2016 ban the planting, production, processing and sale of all GMOs. They have provoked a nationwide uproar among scholars and experts, but enjoy a large popular support.
The country’s top soybean and corn-producing region has suffered from cheap GM soybean imports, undermining its capacity to sell domestic products. Heilongjiang’s powerful agricultural state company, ‘Beidahuang’, which accounts for one-third of the province’s grain production, seems committed to protecting local interests, taking measures to create a non-GM soybean protected area and calling for a law to set up a special zone where the planting and processing of GM plants is prohibited. To what extent it can succeed is uncertain, though the central government has demonstrated its power by putting Beidahuang Group chairman Sui Fengfu under investigation for corruption in November 2014.
Going global?
Acutely aware of the pressure GM imports already exert on domestic production, China’s leaders want to build a strong biotechnological industry and avoid reliance on US companies. The Syngenta deal eventually comes down to China’s need for a domestic champion to position itself in the global biotech seed industry.
Faced with reticence at home, Chinese biotech seed companies also seek to establish a foothold in the global market, with US-listed Origin Agritech launching China’s first GM corn base overseas in 2016.
However, the domestic industry remains behind its Western counterpart, mostly dominated by Monsanto and Dupont Pioneer, and China’s lack of competitiveness weighs on its reluctance to open up its borders to GM food imports.
Import liberalisation unlikely
Current policy allows imports of GM soybean, corn, cotton, canola and sugar beet, which can be only used as animals feed or non-human food processing raw materials.
China is expected to remain a significant importer of GM products, especially as domestic supply cannot meet growing soybean demand, but trade in new products is expected to increase gradually.
The approval process for new GMO varieties from abroad can take up to seven years, and has become even more difficult in the last few years. Strengthening supervision processes might further complexify imports processes instead of easing them, and penalties for non-approved seeds entering the Chinese market are likely to toughen. Overall, China will remain wary of any increase in GM imports, while ramping up the domestic industry and fighting the ideological battle at home.
This article was first written for the Oxford Analytica Daily Brief, which is the copyright holder.