Outbound Agri-Investment Lures China's Enterprises

CRIENGLISH.com | 2008-04-30

The worldwide food shortage has spurred enthusiasm among Chinese enterprises to invest in overseas agriculture sectors. South America and Russia are likely to become the new destinations for agricultural investments from China.

According to a report by the Beijing Morning Post, Suntime International Techno-Economic Cooperation Group plans to expand its agricultural business into the Commonwealth of Independent States, since it has benefited from the Sino-Cuba rice production joint venture, as well as its agricultural project in Mexico.

Propping up enterprises to rent or even buy land in foreign countries for grain production is an effective way to safeguard China's food security, Zhang Xichen, a high-ranking executive in the Suntime Group, said.

His point of view coincided with that of an official from the Ministry of Agriculture. At the Second Chinese Enterprises Outbound Investment Conference, the official said related government departments are making policies to encourage Chinese companies to invest in agricultural sectors outside China.

Suntime group's cooperation with Cuba is a successful example of China's overseas investment. The project, which covers an area of 5,000 hectares, is the largest joint venture in Cuba. It was well received in Cuba because it also helped the local government combat food shortages.

To invest in South America, Australia and Russia will give Chinese enterprises the chance to make use of abundant resources of land and water there, to decrease the production costs of Chinese enterprises and give them easier access to the global grain market. Selling the grain back to China will be a beneficial supplement to the local supply, Zhang Xichen said.

Global grain prices increased by 60 percent in the first quarter of 2008. The food shortage and price hikes forced the Haitian Prime Minister to resign. The U.S. government is also widely faulted for its heavy use of grain to produce biofuels.

In China, thanks to the bumper grain harvests of the past four years, food supply has been adequate. However, the Chinese government is facing more pressure to control the soaring prices of agricultural products.

Xie Guoli, deputy director-general of the Agricultural Trade Promotion Center, told the Beijing Morning Post that China's agriculture has a technical advantage through overseas investment. In the future, China will also enhance coordination of bilateral policies to promote international cooperation in this sector.

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