Agriculture and food production

The sector where China and Russia will work together more closely is agriculture. Arable land covers approximately 13 percent or 122 million hectares of China’s territory, which amounts to only 0.27 hectares per capita. This is less than 40 percent of the world average, and half the level in India.

As China industrializes and urbanizes, while also seeking to convert lower-quality arable lands into grasslands or forest to prevent desertification, arable land is becoming increasingly scarce.

Self-sufficiency is a strategic priority for Beijing, and the government has tightened control over land conversion for construction purposes. However, there is little that can be done without undermining the economic growth that is the source of political legitimacy for the Communist Party.

Beijing, therefore, appears to acknowledge that it will have to import food and in this context Russia is a natural partner. In November 2017, the two countries reached an agreement on supplies of oats, buckwheat, flax seeds and sunflower seeds. Russia’s grain harvest set a record of 135.4 million tonnes in 2017, including 85.9 mln tonnes of wheat. Grain export reached 52.4 mln tonnes in 2017-2018 agricultural year.

In July, 2018, Russia’s agricultural authority announced the agreement with China regarding to expanding the list of Russian regions allowed to export grain products to the country. The issue is about all Russian regions being allowed to supply wheat, soybeans, corn, rice and colza seeds, rather than 1-2 substituent entities as before.

Another aspect in the agriculture policy is the arable land located in the Russian Far East. This question may get an interesting solution by a surprise proposal of Russian authorities in 2018.

On August 13, 2018, Russia has made one million hectares (2.5 million acres) of arable land available to foreign investors in the Russian Far East.

Valery Dubrovskiy, director of investment for the Far East Investment and Export Agency, said that several Chinese companies had already expressed an interest in the deal. “We expect most of the investment to come from China,” he said. “We expect 50 per cent from China, 25 per cent from Russia and 25 per cent from other countries, like Japan and Korea.” The announcement means that all of the million hectares of arable land in Russia’s Far Eastern Federal District is now available to farmers, Dubrovskiy said, adding that the space is suitable for dairy farming or the growing of crops, such as soybeans, wheat and potatoes.

While China is looking forward to ways of meeting the rapidly increasing domestic demand for food, the exploitation of agricultural land in the Far East is not likely to be easily settled. In 2016, Chinese firms had already leased 600.000 hectares of land in the Russian Far East.

Agriculture by Chinese farmers in Russian Far east is locally a sensitive issue. The problem lies not only in developers’ and local bureaucracy’s interests, but also in the institutional vacuum on property rights inherited from Soviet Russia as manifested by the lack of a proper cadastre (a public register of the land). The cadastral value is carried out on only a small part of the Far East District. This problem has emerged in relation to individual property rights to land reserved to Russian citizens willing to invest in the Far East.