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Event Recap: Challenges and Opportunities in China's Fast-Changing Agricultural Markets

08 November 2016

Opportunities in agribusiness and trends in China’s agricultural policy were the focus of Mr Erlend Ek’s presentation. The China Policy roundtable discussion amongst the 36 guests also covered China’s new food security policies and how they impact Australia’s capacity to cooperate with regional agricultural groups in China.

The proceedings began with a welcome from Ms Virginia Birrell and Ms Philippa Jones, Managing Director of China Policy.

Philippa briefly outlined China Policy before handing over to Erlend Ek, Agriculture and Marine Manager at China Policy.

Erlend underlined the shifts in agricultural policy between the period of Deng Xiaoping’s rule and the current reforms under Xi Jinping. He highlighted how policy perspectives have changed from being reactive (let them come to us) to a more proactive approach, which involves actively modernising and seeking cooperation with the outside world. “China will no longer be primarily focused on increasing their supply of national food stocks, but will be looking instead to integrating the country’s major agricultural producers and weeding out the struggling farmers no longer adding value to the overall development of China’s agricultural capabilities.” Part of this shift will see the handing over of state control over the sector to local governors, lending them more independence to enact regional reforms. From this position, the central government will hold governors accountable for any indiscretions.

Overall, Erlend believes that the changes we are seeing in China at a regulatory level signal a change in attitudes – characterised by China moving away from resource maximisation to an eco-system oriented, sustainable approach to agricultural production – what he describes as moving from a free ride to a paid ride. China’s farmers will soon be subject to new tax and budget laws as well as revamped debt financing. These farmers will essentially be held to greater account for their losses, increasing domestic competitiveness and ousting those who are struggling.

A number of stimulating questions from the guests directed the conversation into a deeper analysis of what these policy changes mean for Australian agribusiness. China Policy predicts that in the future, China will invite third party partners, such as Australia, to cooperate in the agricultural sector based on respective priorities, comparative advantages, and levels of development. Creating a larger team will satisfy China’s need to deal with overcapacity and increase their efficiency through the import of technology and services. While it will take time, these developments signal an opportunity for Australian businesses to attain greater benefits from our sister-state and sister-city relationships with China. However, when asked about whether entry negotiations from trade with China will now begin to occur at local levels, Erlend made it clear that unfortunately he is not optimistic that import processes to China will be any less politicised as they have been in the past.

Erlend and Philippa concluded with a recommendation that Australia keep an eye on China’s production in terms of where it looks to focus its efforts in the future. ACBC would like to thank China Policy for helping to produce such an informative and engaging event. We extend a special thanks to Philippa Jones and Erlend Ek for so generously providing their time and their expertise for this very productive session.