A shift towards agriculture and manufacturing?

Yesterday I was told by senior researchers at the China Institutes for Contemporary International Relations (CICIR, a think tank producing reports for the State Council) that although Chinese investment in agriculture and small-scale manufacturing could help African development, the central government is reluctant to  support it because it does not want to encourage migration, which is hard to control and causes harm to China’s image. But over a month ago, Xinhua reported (Chinese firms told to invest more in Africa, 29 May 2010) that Lu Shaye, director-general of the African affairs department with the Ministry of Foreign Affairs, encouraged Chinese companies to “explore more opportunities in sectors like agriculture and manufacturing, apart from the current focus on infrastructure and energy resources.” Liang Guining, deputy director of the research center for foreign investment under the Ministry of Commerce, also said: “Chinese firms could shift their focus more to sectors like agricultural developments that are much easier to operate and more in line with African countries’ needs.”

After this, a number of articles reported on African officials calling for more Chinese investment in African agriculture.

If this shift is real, then it raises a number of question: Does it reflect a turn away from mining and infrastructure, and if so why? Does it target primarily state companies or does it represent an opening to smaller private enterprises? Will China now embrace the agricultural concession model that it has so far shown little enthusiasm for? What conflicts within the Chinese bureaucracy are behind the arguments for and against this move?

At least part of the background could be lobbying by Chinese agribusiness to allow more room for its overseas ventures to offset the impact of imports from ASEAN countries after the start of the China-ASEAN free trade area. One article that makes this case cites the Chongqing (Laos) Agriculture Combined Zone [重庆（老挝）农业综合园区] as a positive example. The zone received 50 hectares from the Lao government for an experimental demonstration zone, with a promise of a further 5000 ha for a commercial farm as well as special privileges for the importing of equipment, materials, and personnel. This model seems to combine the traditional “demonstration farm” approach with that of non-agricultural special economic zones in Laos and Cambodia, for example the Golden Boten City and Golden Triangle gambling zones. But the article also cites other models, like contract cane farming in Vietnam (where the Chinese partner provides the technology), a “research and experimental coffee plantation” in Champasak, Laos, and the “Hongniu organic agriculture science and technology park” in Bokeo, Laos, both set up by Yunnan Province.

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