Beijing turns food trade into strategic diplomacy

China is scouring the globe for new food suppliers in response to trade wars and Trump’s return

China’s quest for food self-sufficiency has taken the country to macadamia orchards in Kenya and cattle farms in Bolivia as part of a recent strategy to diversify its food sources and reduce dependence on traditional Western suppliers.

The loss of market share by US-allied countries is a victory for nations in the Global South, which Beijing seeks to attract in a geopolitical landscape increasingly divided into blocs. Obvious beneficiaries include agricultural powerhouses like Brazil, which has captured some of the U.S. corn and soybean market, while Russia increases its sales of grains, edible oils and meat to China.

The reach of products and suppliers goes beyond traditional ones, highlighting Beijing’s determination to cultivate new trading partners and ensure food security, especially after US President-elect Donald Trump’s trade war exposed China’s dependence on the US and its allies.

This is relevant as the country is the world’s largest agricultural importer, and tariffs are an obvious weapon that China can use in retaliation. With Trump poised to assume the presidency again and possibly intensify trade conflicts, China is better prepared to withstand trade shocks.

“Slowly but surely, it appears that China is finding a path that allows it to trust international markets and trading partners without creating insecurity,” said Even Pay, an agriculture analyst at Trivium China, a policy research consultancy.

Although, in many cases, the volume is still small compared to consolidated exports, these efforts have created a network of suppliers that China can call on if it needs to change sources.

Lobsters: Change of fortune

The commercial benefits trickle down to Vietnam’s coastal cities, key suppliers of lobster to China’s growing middle class. Although Vietnam has been exporting lobsters to China since 2000, the trade reached its peak in 2020 when Beijing banned imports from Australia. Even after the ban was lifted last month, Australia will have difficulty regaining its market share — Vietnam is now the biggest supplier of lobsters to China.

In the city of Song Cau, in northeastern Vietnam, around 90% of lobster production is sent to China. On a November morning, the port of Van Phuoc was packed with vehicles laden with lobsters, with farmers lining up to weigh their goods before sending them on the 1,350-kilometre journey to the Chinese border.

“We totally depend on China, from A to Z,” said Tran Van Thom, a producer of 15,000 lobsters. Since starting in 1996, he has risen from poverty to owning two homes and supporting five children.

In addition to lobsters, Beijing has promised to open its market to a range of Vietnamese agricultural products, align export standards and create designated crossings to streamline trade. These measures increased bilateral trade between China and Vietnam by 19.3% last year, reaching around US$205 billion, according to Vietnam Customs.

Nuts: Looking to Africa

Africa is emerging as a frontier in China’s trade diversification. Traditionally a supplier of metals, minerals and fuels, the continent now stands out as a source of agricultural products, including sesame seeds, nuts and meat.

Over the past 18 months, China has opened its market to avocados from South Africa and Zimbabwe, honey from Tanzania and sheep meat from Madagascar. In 2018, American nuts were targeted with higher tariffs, prompting Chinese importers to look for alternatives.

“We call macadamia ‘green gold’,” said David Gitonga, a trader from Kenya. After the pandemic, prices plummeted and farmers considered cutting down trees, until Chinese customers caused prices to rise sevenfold. Gitonga is now investing US$1 million in a new factory and plans to double contracts with local farmers.

Beef: Strategic Permissions

The growth in consumption of premium products in China has also increased the use of its market strength to promote geopolitical agendas. In 2019, Bolivian livestock associations received a Chinese delegation to assess local health conditions. After significant efforts, Beijing opened its market to Bolivian cattle farmers in the same year.

“Every effort was worth it,” said Alejandro Diaz, former leader of the local industry group, highlighting how the relationship with China is shaped by strategy and opportunities.

China regulates imports of meat and other food products through a registration system and manages an ever-changing list of companies approved for export. While Beijing cites disease and health reasons for any restrictions, this system is also seen as a way of favoring allies over adversaries.

China’s latest moves to diversify supply sources come despite the country’s oversupply of meat due to the economic slowdown, further indicating the weight of these approvals as political gestures. Since lifting a ban in 2018, Beijing has approved more chicken factories in Thailand. In 2023, imports of sheep meat from Uruguay and, last year, pork from Russia resumed.

New risks

While Beijing may be safer with alternative sources of supply, excessive dependence on China is creating new risks for exporters. Demand in the world’s second-largest economy is weakening as the recovery struggles to gain momentum.

Furthermore, relations with Beijing are multifaceted, and any friction could suddenly destabilize trade. Vietnam, for example, has a history of hostile relations with China, and although the neighbors have rebuilt ties after a border war, tensions remain in the South China Sea.

The Vietnamese lobster industry is also mindful of the impact of Beijing’s recent rapprochement with Canberra, which has resulted in the elimination of almost all trade restrictions.

“If China stops or significantly reduces imports from this area, we will be crushed, there is no other alternative,” said Thom, a lobster farmer. “My heart skips a beat if they don’t answer my calls after already receiving billions of dong worth of lobsters. I can only sleep well when they respond on WeChat.”

With information from Bloomberg*